Yen Finds Poise Ahead Of BoJ Meeting

The yen caught a bid Tuesday amid safe haven demand, with China's worsening Covid-19 situation, Russia's ongoing invasion of Ukraine and jitters surrounding this week's corporate earnings reports conspiring against risk sentiment. USD/JPY sold off touching its worst levels in a week, while its RSI pulled back from overbought territory, even as key support levels remained intact.

• USD/JPY operates at Y127.13 at typing, down 9 pips on the day. Bears look for further sales towards Apr 15 low/20-EMA at Y125.87/77. Bulls need a clearance of Apr 20 high/0.764 proj of the Feb 24 - Mar 28 - 31 price swing at Y129.40/44 before targeting the psychologically significant Y130.00 figure.
• PM Kuroda unveiled a suite of measures to cushion the impact of soaring energy and food prices after hours Tuesday. Speaking ahead of Thursday's monetary policy announcement from the BoJ, he called on the central bank to keep working towards its inflation target. At the same time, the Premier called sudden FX moves "undesirable," echoing familiar rhetoric from Japan's financial officials.
• Note the BoJ extended its series of unlimited fixed-rate bond purchase operations by two days, which covers the upcoming monetary policy meeting, signalling continued resolve in enforcing the 0.25% cap on 10-year yield.
• Policymakers are expected to keep their main policy settings unchanged on Thursday despite the recent spell of rapid yen depreciation. Click here to see our full BoJ preview.
• In the meantime, Japan's retail sales & flash industrial output will be out within less than an hour.