The week hasn't gone well for yen bulls as there is no follow through after the BOJ got the ball rolling in trading last week. A key outcome for the spring wage negotiations was largely positive earlier here. Yet, it seems like Ueda's cautious tone this week is what stands out most to traders.
As mentioned here, yen traders are taking a safety first approach now ahead of the BOJ next week. After having been burned numerous times last year, the lesson seems to be that the bulls will also step in when the Japanese central bank actually confirms it is taking action - and not any time before.
USD/JPY has retraced more than half of the drop from earlier this month and that's a telling sign of confidence towards the BOJ, or should I say lack thereof.
