Daily Analysis USDJPY - 3 Aug 2023

Bank of Japan (BoJ) Governor Kazuo Ueda indicated that the tolerance band for the benchmark 10-year Japanese Government Bonds (JGB) will widen from 0.5% to 1.0%. The move pushed JGB yields to their highest level since 2014. The 10-year JGB rose to 0.65% on Thursday.

The Bank of Japan intervened in the market for the second time this week to slow the rise in benchmark sovereign bond yields. This move reflects the bank's determination to control sharp fluctuations in rates while allowing them some room to increase. The buying operation had immediate effects on the currency market, weakening the yen, and causing mild choppiness in the Tokyo stock market, which remained lower.

USDJPY found resistance at the 144.00 level and a correction is happening now, but it may be temporary as the next big target is the 145.00 level, which represents the lowest point from where the authorities declared the possibility of an intervention.