USD/JPY: No response to BOJ's status quo rate decision

• BOJ keeps key policy tools unchanged, USD/JPY remains comatose. 
• Risk-on could keep the yen under pressure during the day ahead. 
• BOJ's dismal economic forecasts may add to bearish pressures around the Yen. 

USD/JPY is barely moving in response to the Bank of Japan's latest decision to keep key monetary policy tools unchanged. 

The central bank retained the 10-year government bond yield target at 0.00% and kept the policy balance rate unchanged at -0.10%, as widely expected. As such, there is little reason for traders to buy or sell the Japanese yen aggressively. 

However, the BOJ said that the Japanese economy is in an extremely severe situation and could contract by 4.7% in the financial year 2020. In addition, the central bank expects the core consumer price index to decline to -0.5% in 2020. These dismal forecasts may weigh over the Japanese yen during the day ahead. 

The anti-risk yen could also face selling pressure due to the uptick in the stock markets. At press time, the futures on the S& 500 are reporting a 0.75% rise, possibly on the back of potential coronavirus vaccine showing positive results in a safety trial. 

As of writing, USD/JPY is trading largely unchanged on the day near 107.25, having witnessed a 5-pip rise to 107.31 immediately following the BOJ rate decision. 

Technical levels