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FX TALKING POINTS:

-USD/JPY Strength Dwindles Ahead of Bank of Japan (BoJ) Rate Decision. Relative Strength Index (RSI) Pulls Back from Overbought Territory.

- EUR/USD[1] Remains Under Pressure as European Central Bank (ECB) Buys More Time. Outlook Mired by Bearish Sequence.

DailyFX Table

USD/JPY STRENGTH DWINDLES AHEAD OF BANK OF JAPAN (BOJ) RATE DECISION. RELATIVE STRENGTH INDEX (RSI) PULLS BACK FROM OVERBOUGHT TERRITORY.

USDJPY Table

The recent advance in USD/JPY appears to be losing steam as the pair fails to extend the higher highs from earlier this week, and fresh comments from the Bank of Japan (BoJ) may alter the near-term outlook for the dollar-yen[2] exchange rate should the central bank show a greater willingness to move away from its easing-cycle.

Even though the BoJ is widely expected to retain the Quantitative/Qualitative Easing (QQE) Program with Yield-Curve Control in April, the central bank may start to change its tune as officials hold internal discussions on a potential exit strategy. In turn, Governor Haruhiko Kuroda and Co. may prepare Japanese households and businesses for a less accommodative stance, and a material change in the policy statement may fuel a larger pullback in USD/JPY as the central bank still anticipates inflation to hit the 2% target ‘around fiscal 2019.’

In contrast, more of the same from the BoJ may keep USD/JPY afloat as the Federal Open Market Committee (FOMC) appears to be on course to further normalize monetary policy over the coming months, and the dollar-yen may stay bid ahead of the Fed interest rate decision on May 2 as Chairman Jerome Powell and Co. as ‘expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal

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