Summary of Opinions from Bank of Japan's June meeting was released overnight and while the document is often overlooked by investors, this time it deserves some attention. The document noted that while the Bank expects CPI inflation to moderate towards the middle of the current fiscal year (Q4 2023), it does not expect it to slow below 2% target. Bank of Japan said that inflationary pressures in the economy increased as employment and income situations improved and tourism demand recovered. Moreover, it was noted that one BoJ member called for an early revision of the yield curve control programme. While it is still a minority, it hints that a change in attitude may be taking place and it may be more evident at BoJ's next meeting (27-28 July, 2023).
Japanese yen gained on those news and is the best performing G10 currency now. Taking a look at USDJPY chart at D1 interval, we can see that a recent rally on the pair slowed after reaching the upper limit of the upward channel. Recent gains on the pair have been quite quick and steep therefore one cannot rule out some profit taking. However, should pullback deepen and the pair break back below 142.00 price zone, it may hint that a larger correction is underway. In such a scenario, 138.25 support zone will be on watch. On the other hand, should it turn out to be just a brief pause in the upward move and bulls regain control, a 144.00 swing level should be seen as the first potential resistance.
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Source: xStation5
