USD/JPY surges as BOJ offers to buy unlimited amounts of JGBs 1-3 year maturity

USD/JPY has surged following a headline that BOJ offers to buy unlimited amounts of JGBs 1 to 3 year maturity at yield of 0.020% above previous close.

The immediate response has seen USD/JPY rise from 108.55 day lows all the way to touch 109.28 day high before retracing most of the move, with price action currently at 108.68. The Nikkei 225 has failed to follow thrugh the move higher in USD/JPY, currently quoted at 17,782.00 or -0.45%, while the DXY, US 30 bond yields and Gold are fairly stable, suggesting that the rise seen in USD/JPY was not being underpinned by other correlated markets. 

USD/JPY technical picture

Technically, Valeria Bednarik notes: "Technicals in the daily chart have reached extreme overbought conditions, as the pair has been rising strongly since early last week, and given that the price has neared the key psychological 100.00 mark, investors may take some profits out of the table, particularly if stocks in Asia are weak, leading to a downward corrective move."

As per Intraday, Valeria adds: "1 hour chart shows that technical indicators remain flat around their mid-lines, failing to suggest a clear upcoming direction, while the price remains well above a bullish 100 SMA, currently at 107.90. In the 4 hours chart, technical indicators are giving signs of upward exhaustion, retreating from overbought readings, and in line with further slide on a break below 109.00."