Yen Getting Ready for BoJ Decision

yen

By Dmitriy Gurkovskiy, Chief Analyst at RoboForex

It has been a long time since the yen did not react to the BoJ policy rumors and its ‘too loose’ monetary policy criticism, but now the situation is likely to change.

Market participants have been discussing monetary policy changes for days. Last week, a few news agencies published some info on the BoJ discussing the same. What these changes are going to be like is unknown, but sources say it may be about the list of assets the Bank of Japan is now buying. QE is unlikely to become a point in this discussion, as in fact, this is the only factor supporting domestic inflation.

Inflation and its growth remains the most critical issue for the BoJ. QE that is still working now was launched to counter decades of deflationary pressure. The inflation issue is far from being resolved, while the Japanese sovereign debt is constantly increasing, which is a cause of worry for the Cabinet and the BoJ.

So far, we know nothing fur sure and can only guess on what central bankers discuss. The next BoJ meeting is scheduled for July 30 and 31, and once the meeting minutes come in, the market may learn something from them. This could make the situation quite nerve wracking and volatile for the yen early next week. Currently, the Japanese currency is looking fine in the lights of the weakened dollar that has retreated because of Donald Trump’s hawkish speech.

Technically, the USDJPY on D1 is switching from an uptrend to a downtrend. First, this was signaled by the divergence, the next signal will be the current ascending channel support breakout at $110.90. The immediate targets of the new downtrend may lie near the lower projection  channel support. As for Fibo analysis, the correction has reached 23.6% so far, while the following downtrend targets may be at 38.2% (109.90), 50.0% (108.90), and 61.8% (107.90).

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

Having majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.