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USD / JPY: if the Bank of Japan will take additional stimulus measures _25/04/2016

Technical analysis and trading recommendations -

As was stated by Advisor to the Prime Minister of Japan, Honda, to sustain the Japanese economy and the acceleration of inflation is necessary to further easing of monetary policy.

According to Honda, the new Bank of Japan easing policy could happen in June, unless there is a strong deterioration in the economic situation. Nevertheless, the Government of Japan as Honda said it is necessary to maintain readiness for currency intervention. He also noted that "abenomics" needs a new phase of the combination of fiscal and monetary stimulus.

Last week in the media and it was reported that the Bank of Japan, perhaps as early as this week, will increase announced in January a policy of negative interest rates. On Friday, the USD / JPY pair rose more than 2.0% to 3-week high near 111.80 mark. Since early February, the pair has lost more than 1,300 points under the influence of expectations that the Fed will not raise interest rates in the near future, as well as the lack of confidence in the monetary policy of the Bank of Japan.

The strengthening yen is also accompanied by negative macroeconomic data from Japan, coming out lately, as well as increased demand for safe haven against the backdrop of uncertainty in global financial markets and the political arena.

With the opening of today's trading day, there is correction to the strong strengthening of USD / JPY last week. However, it is possible that the pair will continue against the backdrop of the upcoming 27-28 April meeting the expectations the Bank of Japan.

Also Wednesday, a meeting of the Committee on the Federal Open Market Operations (FOMC). Although interest rates are unlikely to change, however, Fed officials may speak optimistically about the economy signaled further rate hikes. It will also have a positive impact on the pair USD / JPY.

If this week's Bank of Japan significantly soften monetary policy, it is possible that the pair USD / JPY may rise to levels of 114.75, 115.00 in a short time.

Monday, 25 Apr, 2016 / 12:30

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