The Japanese yen is losing ground against the US dollar. The risks in the capital markets are relatively low, which decreases the demand for safe haven assets.
The BoJ Chair Haruhiko Kuroda said today that the regulator is not going to tighten the monetary policy before the inflation reaches higher levels, with the CPI being at least at 2%. Moreover, even after this level has been tested, the easing fiscal policy will still remain as is for some more time, Kuroda said.
This is obviously necessary, and the point lies not in the CPI reaching that 2%, but in maintaining this level of inflation, while also keeping the impulses that help the inflation grow.
The very economic system is working properly, Kuroda added, with the prices growing rather steadily. The consumer inflation is however slowing down the overall growth. The real index value, excluding food and energy prices, is 0,5% at most, which is too little.
As per BoJ consensus, the 2% target may be reached in the financial year of 2019, even with the current risks here to stay. Mr Kuroda still being the head of BoJ also points out that the struggle against deflation is still here to stay.
Technically, USDJPY is uptrending on H1, with the price currently heading to the resistance at 108.50. Once it has been reached, there may be a pullback towards the tend support at 107.60. Still, before reaching this major support the price will have to take on a few intermediate ones, the first one being at 108.25, which is the current short term asceding channel support. After breaking it out, the price may move to the lower projection channel to reach the next support at 108.00, which will be actually determining the next move.
Author: Dmitriy Gurkovskiy, Chief Analyst at RoboForex
Disclaimer
Any forecasts contained herein are based on the authors’ particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
