The BOJ surprise earlier in the week sent the pair reeling, in a drop from 137.15 in the run up to the policy decision all the way to a low of 130.56. There was a bounce from there, with the daily close managing to keep above the 16 June low of 131.49. That is one notable level to be wary of as buyers keep price action from falling back towards 130.00.
Since then, markets have started winding down towards year-end and we are seeing the drop consolidate.
It's a slow and steady move higher towards 132.60-70 levels now but sellers remain very much in control. The 100-hour moving average is seen at 133.24 currently and will be a key near-term level to eye for any change in sentiment/momentum.
But in the bigger picture, what's next for USD/JPY?
I would argue that a lot of it will come down to any chatter about a further pivot by the BOJ. Adding to that is if market pricing would look to go against any pushback from policymakers that they are not looking to change their stance.
I mean, one can reasonably expect policymakers to keep defending their current ultra easy policy but at the end of the day, actions speak louder than words. And in turn, their credibility is most certainly at stake in 2023.
If there is even the slightest indication of the BOJ turning the corner and angling its crosshair towards fighting inflation, USD/JPY may very well look towards 100 or 110 again in a jiffy.
