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Forex: EUR/JPY dips and retraces following Kuroda comments

FXstreet.com (Barcelona) - EUR/JPY dipped swiftly and retraced following commentary from BoJ Governor Kuroda this afternoon.

The pair had been trading at multi year highs of 130.50, but dipped swiftly to test the overnight level of support and the hourly 50 MA at 129.50, following commentary from the BoJ Governor Kuroda. The pair has currently retraced some of its declines and is now trading at 129.96. Governor Kuroda warned markets not to expect an avalanche of Japanese capital outflows and that the Yen is still in the process of correcting from excess strength. So far he believes that the market movement has been in line with expectations and he has no plan to take additional easing measure “one after another”, or adjust policy for now. Nevertheless, should conditions command he noted that he is willing to take action.

In terms of the weakening Yen, he stood by the policy, adding that he is willing to explain himself to the G20 if required, and that it is widely known that the easing policy is not aimed at weakening Yen. He finished by commenting that he will reinstate the Bank Note Rule when the BoJ exits easing policies, but at present, Japanese Government Debt is “not sustainable”. Overall, he see the Yen decline as part of a correct phase, and no risk of capital flight. Hourly Stochastics look to have turned lower just below oversold territory, while hourly RSI is at 54 having moved lower after a period of range bound movement.

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The GBP/JPY suffered a jolt on the back end of comments from the BoJ, causing the pair to plunge below the 151.70 level during the afternoon of European trading. In recent minutes however, the pair has erased this setback and is testing the 152.00 level currently. At this juncture, the cross is trading positively at +0.14%.
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The Dollar is trading higher today against its Canadian counterpart following the FOMC minutes early release. After rising around 20 pips in the last hour from 1.0145, the USD/CAD has tested the 1.0165 level. Currently the pair is trading at 1.0160.
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