The JPY was among the strongest G10 FX currencies in recent weeks. Unstable risk sentiment as well as limited room of officials considering direct currency intervention kept the currency attractive as a safe haven play. Elsewhere, the BoJ’s negative interest rate policy is still not received well by markets.
Depending on risk sentiment, additional upside cannot be excluded in the short-term.
When it comes to the BoJ, our main scenario remains that a more aggressive monetary policy stance will be employed as part of the 15-16 June meeting. However, in order to improve liquidity conditions it cannot be excluded that additional quantitative easing will be decided at end of April.
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The central bank may even decide to purchase domestic blue chips in order to ease market conditions. Nevertheless, as soon as this week it should remain about global risk sentiment to drive the currency.