BoJ Stands Pat: a Look at the USD/JPY

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The Bank of Japan decided to maintain its record pace of stimulus and noted that the softer exchange rate is providing relief as well. We should expect the BoJ to continue holding its current monetary stance because it expects the inflation rate to be around 1.25% for “some time” and the target rate is 2.00%. Let’s take a look at the USD/JPY.

Last week’s strong NFP data pushed up the USD/JPY, but failed to clear it above the previous week’s high at 110.08. It has since retreated back below the levels ahead of the NFP, and looks to complete a double top. If it can complete the double top and hold below 109, it is likely in consolidation. Support 1 = 107, Support 2 = 105.45-50. However, if after this week, price was able to rebound back above 109.25, we are likely going to see a test of the 110.08 high, and a break above that could send USD/JPY toward the 2008-high at 110.68.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.