The Bank of Japan left the interest rate and other monetary policy settings unchanged. The Bank said in a statement that it expects inflation to slow down towards mid-2023 and that it will review its ETF purchases. However, there was no word about any possible change in the path of monetary policy given recent wild FX moves and overall deteriorating macroeconomic situation. BoJ Governor Kuroda doubled down on his commitment to keep policy unchanged saying that rate hikes or exit from loose monetary policy should not be expected anytime soon. Comments trigger some downward pressure on JPY.
The currency pair that is likely to be active during the day today is EURJPY. Not only because of lack of action from BoJ but also due to a number of important releases from the euro area. German GDP data for Q3 2022 will be released at 9:00 am BST while German CPI inflation for October will be released at 1:00 pm BST. Both reports have a scope to trigger EUR volatility spike, especially as state-level CPI readings point to a high chance of an upside surprise in inflation data.
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Create account Try a demo Download mobile app Download mobile appTaking a look at EURJPY chart at H1 interval, we can see that the pair bounced off the short-term upward trendline recently and tested 146.30 resistance zone following today's BoJ decision. The attempt to break above turned out to be a failure but another test came after Kuroda's speech at the beginning of the European trading session. This attempt was also a failed one, at least so far, and now traders will wait for German GDP data as the next potential volatility event.
Source: xStation5
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