USDJPY Down to 116?

USDJPY Down to 116?

USDJPY Down to 116?

Tonight’s Bank of Japan monetary policy announcement is one of the most important event risks on this week’s calendar. Earlier this year, a number of economists believed that the Bank of Japan would unleash a strong dose of stimulus at the end of 2016. However that was before the Japanese Yen lost more than 10% of its value versus the U.S. dollar and British pound. For an export dependent nation like Japan a weak currency goes a long way in boosting growth and driving up inflation – the 2 main goals of easier monetary policy. So tonight, we do not expect any changes in monetary policy from the Bank of Japan and if anything, the BoJ should be optimistic, maintaining an upbeat outlook on the economy.

Taking a look at the charts below USD/JPY could drop all the way down to the 20-day SMA of 114.40 and the uptrend would still remain intact. On a shorter term perspective, we expect the currency pair to fall to 116 and find support near that level. The 4 hour chart shows that as long as the currency pair holds below 118, a stronger pullback is likely.

Chart Of The Day

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