USD/JPY drops as BOJ buys fewer bonds than expected

The bid tone around the Japanese Yen strengthened, pushing the USD/JPY pair to a session low of 112.52 after Bank of Japan’s (BOJ) 1 trillion Yen bond buying effort failed to meet market expectations. 

The central bank was widely expected to boost its bond buying program in order to avoid a further rise in the 10-year JGB yield. However, the 10-year yield hardened by four basis points after the central bank fell short of expectations. 

Consequently, the Yen strengthened; moreover, on Thursday, the 10-year yield had jumped to the highest since policy makers began targeting a level around zero percent in September.

USD/JPY Technical Levels

A break below 112.52 (Jan 24 low) would open doors for a sell-off to 112.00 (zero figure), under which a major support is seen directly at 111.36 (Nov 28 low). On the higher side, 113.13 (session high) could offer resistance, which, if breached would shift risk in favor of a rise to 113.95 (Feb 1 high) and to 114.24 (Jan 11 low).