USD/JPY: Kuroda is in focus this week, Yen consolidates BoJ below 101 handle

USD/JPY is currently consolidated below the 101 handle after last week's events that leave the BoJ open to further scrutiny later this week and USD/JPY fragile on domestic events on the calendar.

Last week, the BoJ added new criteria to its policy while leaving rates and the rate and volumes of asset purchases on hold. The FOMC were unchanged this time around leaving the door open for December as a possible time for increasing interest rates. For today, at 0530GMT - Kuroda will speaks at a meeting with business leaders in Osaka and a press conference will follow at 0745GMT.

"The decision to target 10-year JGB yields at about zero, adding ‘yield curve control' to QQE, was the novel twist, aimed in part to counter the impact of low/negative rates (and flat yield curves) on the financial sector," explained Kit Jukes, economist at Societe Generale, adding, " But it is also part of the BOJ's continued focus on getting real interest rates and yields down, and inflation expectations up."

Later in the week, besides the U.S. data such as U.S. GDP estimates for Q2 and durable goods, the main focus could again be the BoJ, with Governor Kuroda due to speak again on Thursday and the July minutes are also due. "Given that many elements of the BoJ's “QQE with yield curve control” framework are unclear, markets will be looking for any further clues," explained analysts at ANZ.

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that the technical picture suggests that the upward potential is still well limited, as the 100 DMA extended its decline above the current level, now around 103.30, the level to surpass to consider additional recoveries. "Nevertheless and in the same chart, technical indicators are losing upward strength below their mid-lines, suggesting limited buying interest around this point."

"In the 4 hours chart, the price has found some short term support around 100.65, the 50% retracement of the Abenomics era rally, and the immediate support, but remains below its moving averages while the RSI indicator turned south around 47, supporting the longer term outlook."