The Bank of Japan (BoJ) met to discuss monetary policy during the April 30 Asian session. It’s statement to the public was pretty much in-line with its previous statements – that it does not intend to ease further, but is ready to act if needed. Meanwhile, it does note that growth is picking up and members of the BoJ expect growth to be above potential in 2015 and 2016. However the currently sluggish consumption is likely going to delay inflation from meeting target in 2015. While BoJ gov. Kuroda expects CPI to reach the 2% target in the first half of 2015, a couple of members do not believe the inflation target will be met even in 2017.
With no change in tone regarding the current easing policy, it would not be a surprise to see the Japanese yen under pressure again. We saw the EUR/JPY challenge its 2015 falling trendline. In fact the JPY is falling across the board. Even the recently weak USD is rallying against the yen, or at least keeping the USD/JPY from becoming bearish.
As we can see in the 4H chart, the market was testing a consolidation support area around 118.50. Going into the BoJ meeting, traders were bearish in the near-term. But afterwards, the 118.50 level held as support and traders in the US session is now pushing USD/JPY back towards the 120 handle. Part of the reason USD/JPY got a jolt in the US session is that the jobless claims data came in much better than expected at 262K instead of the forecast around 290K.
The daily chart shows that by holding above the 118.33 March low, USD/JPY is holding above the central pivot of a multi-month consolidation range, and thus is holding a slight bullish bias especially since he trend before the consolidation was bullish. The RSI has also been holding above 40, which reflects maintenance of the bullish momentum throughout the months of consolidation.
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