USD/JPY recovered from losses

US dollar managed to regain ground against the Japanese yen on Thursday, bouncing off two-week lows, following the dovish comments by FED Chairman Bernanke yesterday.

USD/JPY pulled back from a session low at 98.22, registered at 22:40 GMT on Wednesday, the lowest point since June 27th, to reach 99.46 at 8:50 GMT. The cross was still down by 0.23% for the day. Support was likely to be found at June 27th low, 97.55, while resistance was expected at current session high, 99.94.

US dollar took a sharp fall against its major peers after on July 10th Federal Reserve Chairman Ben Bernanke said, that bank’s policy should remain accommodative, even after the minutes of FED’s June meeting revealed that there were debates, regarding a possible exit to the stimulus program. According to FED minutes, half of the 19 members of FOMC voted in favor of terminating monthly asset purchases by the end of this year. At the same time some of the policymakers expected to see a more resilient increase in US employment before initiating a reduction of scale of stimulus.

Meanwhile, the Japanese yen managed to preserve its gains against the US dollar, after Bank of Japan Governor Haruhiko Kuroda and other policy makers abstained from introducing additional monetary stimulus and raised their assessment of the economy, which has begun to revitalize for the first time since the March 2011 disaster. Central bank officials maintained their intentions to expand the monetary base by 60 to 70 trillion JPY per year, which met projections by experts. The bank also kept its forecast from April, regarding a 1.9% increase in the core consumer price index in the 12 months, starting in April 2015. On the other hand, inflation estimates in the current fiscal year were pared to 0.6% and 1.3% in the following 12-month period, respectively.

“There is no need for additional BOJ stimulus because the economy is picking up,” said Marito Ueda, senior managing director at FX Prime Corp. (8711), a currency-margin company in Tokyo, cited by Bloomberg. “The BOJ decision was expected. It seems the market is overreacting a bit, with the yen being bought back.”

Additionally, the International Monetary Fund revised up its Japanese economic growth forecast to 2% during 2013 from 1.6% as projected in April.

Ultimately, the Japanese yen remained almost without change against the euro, as EUR/JPY pair ticked up 0.03% to 129.32. GBP/JPY cross was also almost unchanged, inching up 0.07% to 149.80.