30 July 2019, OctaFX – The Japanese yen strengthened after the Bank of Japan delivered its interest rates decision. As expected, the central bank left interest rates unchanged at -0.1%. It also left its forward guidance unchanged.
The bank said that it will keep very low interest rates levels for an extended period of time at least through spring 2020. On the yield curve control, the bank voted to purchase Japanese government bonds (JGBs) so that the 10-year JGP yields will remain around 0%.
The bank added that it “will make these purchases in a flexible manner so that their amount outstanding will increase at a pace of about 80 trillion yen”. Meanwhile, data released before the rate decision showed that the unemployment rate dropped to 2.3% while the industrial production contracted by -3.6%.
USDJPY technical analysis
The USDJPY pair dropped to an intraday low of 108.63 after the BOJ delivered its interest rates decision. The price is now slightly below the 21-day and 42-day moving averages while the RSI has dropped sharply to the current low of 39. The price will likely continue moving lower, to test the important support level of 108.50.
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