The USDJPY pair trades positively to test the first key resistance at 127.40, keeping its stability below it until now, accompanied by witnessing clear overbought signals through stochastic RSI, waiting to motivate the price to resume the correctional bearish trend, which targets 125.00 level as a next main station.
Therefore, the negative scenario will remain valid for the upcoming period unless breaching 127.40 followed by 128.20 levels and holding above them.
On the fundamental front of the Yen monetary policy, Bank of Japan (BOJ) Haruhiko Kuroda said in a statement on Thursday, not to expect inflation to stay around 2% next year and the year after.
BoJ Governor Kuroda also added that the BoJ needs to continue with monetary policy easing, and when it will exit, the BoJ will likely combine rate hike with balance sheet reduction through specific means, timing will depend on economic, price, and financial developments at the time. On the contrary, Japanese Prime Minister Fumio Kishida said that the Bank of Japan (BOJ) should make some efforts to achieve the targeted inflation rate of 2%.
The yen bulls have not responded much to the comments of the BoJ Governor and the Japanese Prime minister, as the Japanese economy has restricted the growth catalysts, faces external supply chain issues, and the broader strengthening of the USD, which are hurting the yen on a broader note.
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