The USD/JPY pair made a correction to the south in the first half of the week down to the level of 126.92 but then, following the meeting of the Bank of Japan, we witnessed a new rally of 433 points towards the high of 131.15. This was followed by a powerful bounce by 190 points and a close at 129.75.
Investors expected that the Japanese regulator might step back a bit from its sensitive monetary policy. Furthermore, before that, various government officials had talked a lot about the fact that Japanese are disappointed with the rise of inflation, and that, given the actions of the US Federal Reserve, it would be time to modify their monetary policy. But the Bank of Japan remained true, leaving the negative interest rate at -0.1% untouched and declaring its willingness to buy an unlimited number of bonds each session as needed.
According to many analysts, the Central Bank will keep its soft monetary policy unchanged throughout 2022, and will also maintain massive incentives, perhaps at least until fiscal year 2023.
No important information regarding the state of the Japanese economy is expected to be released this week. Traders also need to keep in mind the two upcoming holidays: Japan celebrates Constitution Day on Tuesday, May 03, and the Greenery Day on Wednesday May 04.
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