Kuroda Comments Weigh on JPYThe Japanese Yen is under pressure once again today, not least from the rebound in risk sentiment which is sapping safe-haven flows. BOJ governor Kuroda was seen making a series of dovish comments to Japanese parliament overnight. Kuroda told lawmakers that the BOJ will continue with its huge monetary easing program in a bid to help keep the economy supported as Japan continues to transition out of the pandemic. Kuroda cited the bank’s view that the current pickup in inflation will prove transitory, not requiring a shift in monetary policy approach.Notably, when questioned over the recent collapse in JPY and the criticism that the fall was a result of the BOJ’s monetary policy, Kuroda pushed back, saying: “I don’t think the BOJ’s monetary policy was the factor behind a rapid yen weakening. The recent yen weakening may have been driven by an abnormal situation where oil prices topped $130 per barrel.”Commenting on the recent uptick in domestic inflation, Kuroda went on to say that only a quarter of the move was down to JPY weakness while the rest was attributed to USD-based commodities prices spiking globally. The BOJ believes this cost-push inflation will subside and due to the negative impact on the economy, it is important the BOJ continues with its support.Where to Trade JPY Weakness?EURJPYWith the ECB gearing up for a July rate hike, the policy divergence between the ECB and BOJ should keep EURJPY supported near-term. Price is currently attempting to breakout of the corrective bull-flag pattern. Bulls can look for a break of the 137.74 level targeting a move up through current highs towards 140.82. With the retail market almost 80% short, there is plenty of room for a further breakout here.
Source: Tickmill
