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Forex: USD/JPY peaks at 94.91 on reports about BoJ

FXstreet.com (Barcelona) - The USD/JPY fall to 93.54 low on Monday and moved higher yesterday. Now, the question is if reversal will take place or was it mere correction. Today, the pair extended gains up to 94.91, closer to the 95.00 psychological level, on reports that the BoJ is preparing to merge its two JGB buying programs into one, with the intention of making the scale of the BOJ's easing programs more transparent.

“The biggest consequence of combining both programs though is that it could give the BoJ far greater freedom to purchase a wide range of tenors. By design, APP purchases are concentrated at the very front end of the JGB curve in the 1-3y sector, whereas Rinban operations can buy all the way out to the 30y point”, wrote UBS analyst Gareth Berry. “A combined program is likely to be more Rinban-like in its freedom to buy across the curve. That means lower JGB yields at the long end, and a higher USD/JPY seem likely as a result”, he added.

“We note the technical signals are negative, which leaves supports exposed. Below 93.45/35 will lead to the 55 day moving average at 92.80 being targeted”, wrote Commerzbank analyst Karen Jones, pointing to resistance at the 20th March high, at 96.14.

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