It seems like BOJ governor Kuroda’s remarks about exit strategy from easy policy is triggering a few bids/algos but as mentioned here, this isn’t the first time that the central bank has talked about this. As much as everyone is anxious about a policy shift in the BOJ, they have talked about its exit strategy planning even when it never seemed like they would hit the 2% inflation target.

That said, it is enough to drag USD/JPY lower from 127.20 to 126.65 before keeping around 126.80 levels now:

Kuroda also did mention that a US rate hike may not necessarily lead to a weaker yen via outflows but I don’t think that is any major trigger for the currency to be bid. As much as yen buyers are starting to get a fair bit excited (USD/JPY chart does scream for a pullback), I’m afraid this isn’t any new message (yet) by the BOJ.

In any case,  USD/JPY  is still poised for a third straight weekly drop as sellers continue to keep the near-term momentum going as well. From the chart above, price is being defended by the 100-hour moving average (red line) and that is a reassuring technical signal for sellers to keep the recent run going.

A firm drop below 127.00 sets out the target for 125.00 next for the pair. The more relevant factor in my view will be the bond market and for now, Treasury yields are still playing ball. 10-year yields are down 2 bps to 2.727% on the day.

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