FX Action: USD-JPY has settled back in the mid 117s
FX Action: USD-JPY has settled back in the mid 117s after failing to sustain gains above 118.00 earlier in the week, which had been seen after the BoJ left monetary policy unchanged and bank governor Kuroda ruled out a reduction in ETF purchases. There had been some speculation that the BoJ might have hinted at tapering given the weakness in the yen and rebound in oil prices, which is reversing two principal drivers of disinflation in Japan. Analysts continue to target the 2016 high at 121.68, which was seen back in late January. The Fed's tightening bias contrasts the BoJ, even though rising oil prices and the nascent weakening trend of the yen is pushing the Japanese central bank to a more neutral, if not hawkish, stance. The BoJ last week announced a ramp up in purchases of debt maturing in 10 to 25 years as part of its "yield curve control" policy. USD-JPY support is at 116.89-90, ahead of 116.55. The 20-day moving average is presently some way below spot, at 115.67, and the 14-day RSI momentum indicator is presently at 72.01, putting the market above the 70.0 "overbought" threshold, suggesting that a buy-on-dips tactic would be an advisable bullish strategy.