COZfx: Dollar sharply lower against yen, BoJ maintains its interest rate

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COZforex: The dollar remained sharply lower against the yen on Tuesday after the Bank of Japan disappointed market expectations for steps to ease market volatility following its latest policy setting meeting.

Amid European afternoon trade, the dollar posted steep losses against the yen, with USD/JPY dropping 1.87% to 96.90.

In Japan’s economic news, consumer confidence edged up to a level of 45.7 in May. Meanwhile, Japan’s Eco watchers survey for the current economic conditions dropped to 55.7 in May and the Eco watchers survey for future economic situation declined to 56.2 in May.

This morning, the Bank of Japan left its benchmark interest rate unchanged at 0.1% in June and maintained its asset purchase program. In addition, the BoJ revised up its assessment slightly, stating that Japan’s economy has been picking up.

Furthermore, the M3 money supply in Japan advanced 2.8% annually in May, while the M2+CD money supply rise 3.4% in May. Moreover, according to the Business Survey Index, sentiment at large manufacturing industries in Japan advanced to a reading of 5.0 in the Q2 2013.

Meanwhile, investors remained focused on whether the Federal Reserve will begin to unwind its easing policies later this year. Speculation that the US central bank will begin to taper its asset purchase program continued following Friday’s upbeat jobs data and after ratings agency Standard & Poor’s revised its long-term outlook on the US credit rating to stable from negative on Monday, citing an improving economic outlook.

In technical analysis, COZforex senior currency strategist Ian • Quigley said, USD/JPY is predicted to find support at 97.65, and a drop through could take it to the next support line of 96.95. Meanwhile, the pair is predicted to find its first resistance at 99.19, and a rose through could take it to the next resistance line of 100.03.

(COZ forex UK)