Yen Rockets After BOJ Meeting

After a two-day meeting on monetary policy, Bank of Japan suddenly announced that there is no additional stimulus planned for the economy at this time, and the deposit rate  was left unchanged at -0.1% as in January. A few days ago, the central bank was widely believed to deploy additional monetary easing, facing slowdown in growth and the possibility of deflation.

Yesterday, data on Japanese industrial production for March was released. It came in with a reading beating expectations. Output last month surged up 3.6% compared with a fall of 5.2% in February. On a year basis, the index was up 0.1%, indicating that the economy is on its way to a recovery, although at a slow pace.

According to data published earlier today, Japanese consumer price index dropped 0.1%, while economists’ had forecast it to remain unchanged. The core CPI (excluding fresh food) in March fell 0.3% on a yearly basis. After eliminating the effect of energy prices, the index marked a 1.1% increase from a year earlier.

The US GDP (q/q) for the first quarter in 2016 was released today with the reading of 0.7%, higher than the expectation of a 0.5% increase. The index for the quarter prior was at 0.9%. The dollar is extending its downward move after The FED’s announcement that the interest rates remain unchanged, and no clear signals for rate hike were provided. The dollar index DXY dimmed to 93.83, down 0.6% from the last settlement.

usdjpy d1

Fig. USDJPY D1 Technical Chart

USDJPY is in a continuous fall due to a strong yen after hitting the resistance of 123.797  in November 2015. The pair is in a bear market as indicated by the reading 37.3666 on the RSI. The current downtrend is expected to continue. A selling position is encouraged as signaled by the red arrow.

Trade suggestion

Sell at 108.420, Stop loss at 108.614, Take profit at 108.060

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