USD/JPY drops to fresh daily lows below 109 on Kuroda comments
- BoJ's Kuroda says they are moving closer to inflation target.
- DXY doesn't show a significant reaction to GDP data.
- USD/JPY on track to close week nearly 200 pips lower.
The USD/JPY came under a renewed selling pressure in the NA session and broke below the 109 mark to refresh its daily low at 108.65. As of writing, the pair was trading at 108.72, losing 0.64% on the day.
Speaking at a panel at the World Economic Forum in Davos, the Bank of Japan's Governor Kuroda said that medium to long-term inflation expectations was projected to rise, adding that some indicators pointed to rising wages as well. According to Kuroda, Japan is finally moving closer to the inflation target. These comments allowed the JPY to continue to gather strength against its rivals. The EUR/JPY and the GBP/JPY pairs lost 100 and 200 pips respectively.
On the other hand, following the data from the United States which showed that the preliminary reading of the fourth-quarter GDP growth remained unchanged at 2.6%, missing the market expectation of 3, the US Dollar Index struggled to recover its daily losses. At the moment, the index down 0.3% at 88.92, and is looking to make the weakest weekly closing in more than three years.
Technical outlook
The first technical support for the pair aligns at 108.50 (Sep. 5 low/Jan. 25 low) ahead of 107.30 (Sep. 8 low) and 107 (psychological level). On the upside, resistances align at 110.30 (Jan. 24 high), 111.15 (Jan. 23 high) and 111.75 (200-DMA).