The yen strengthened after the decision of the Bank of Japan that maintained its monetary policy, also because of strong industrial production and retail sales data. According to Bloomberg, the BOJ held off on expanding their monetary stimulus. The bank’s governor, Haruhiko Kuroda, and his colleagues think they need more time to assess the impact of negative interest rates.
The decision actually was a surprise because some economists had projected the central bank would make an action in response to strengthening yen. The BOJ policy makers are sure that their success in pushing down borrowing costs since adopting the negative-rate strategy in January will accelerate lending.
Earlier in the day, inflation figures were released with consumer prices index fell 0.3% in March.
USD/JPY currently is under heavy pressure, testing intraday key support area at 107.907. If the price managed to break the support, the yen possibly will continue to strengthen to 106.828-105.923.
Note that hourly CCI is rising but stochastic is already overbought. As alternative scenario, watch for bearish signal confirmation on a pull-back move to within the Fibonacci resistance area at 109.422-110.359 to go short with 108.843 as target and 107.907 in extension.
Be careful if the price managed to break the resistance at 110.359 because it will turn the intraday bias to bullish and possibly will be followed by a bullish move up to 111.025-111.874.