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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