USD/JPY Dips Sharply On BoJ Prices Report, But 20-day EMA Support Holds

USD/JPY pulled back sharply post the Asia close on Tuesday. This followed a BBG sources report that “the BoJ is likely to discuss raising its inflation projection for fiscal year 2023 and 2024 at its policy meeting later this month, extending the period in which it sees prices hitting or exceeding its 2% goal, (see this link)”. The pair pulled back to 148.84, but was well supported on this move. In NY trade we got to 149.85 and we track just under 149.80 currently. Yen lost 0.20% for Tuesday's session.

• The BBG sources report also noted that the BoJ’s inflation outlook for ’25 will remain around 1.6%. That would mean that the Bank still expects inflation to fall back below target within its forecast horizon. This likely helped cap yen gains.
• Technically, support held for the pair at 20-EMA (148.81), while we remain some distance from the Oct 3 low at 147.43.
• Support for the pair in the US session came via higher US yields, following generally upbeat data, led by retail sales. US 10yr got to 4.83%, +13bps.
• The local data calendar just has Tokyo condominiums for sale.
• Wages will remain in focus, particularly in terms of the BoJ's efforts to sustainably reach its 2% inflation target. NHK reported late yesterday that Union groups will seek a wage rise of at least 5% next year (see this link).