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With almost a month left before the April 1, when Japanese government will increase the consumption tax hike to 8%, analysts are making their bets on whether the BoJ will add fresh stimulus or the economy is strong enough to withstand the potential threat to its prosperity. Japan's policymakers are keeping an eye on each data release. Therefore, Thursday's inflation report can play a decisive role in Yen's performance.
Traders, however, do not expect USD/JPY to be highly volatile this week, with the consensus forecast standing at 102.45, just couple of pips above the price at the moment of writing. Other data, however, is quite contradictive, with 66.7% of respondents having bearish outlook, while 71.57% of all Dukascopy traders are holding long positions on the pair. Moreover, 67% of pending orders in a 100-pip range are placed to buy the greenback against the Yen. Trader Experimenter1 sees the pair moving sideways this week, while, trader Victor suggests "the current week pattern is downward and the pair will continue to slide further. Closing around 101 is expected." Hence, data is quite contradictive and should be treated carefully.
According to Rokasltu, "USD/JPY is above 100 mark, but movement upside is limited also. I think this pair's movement will be limited during coming week and it will end week slightly lower." On a daily chart the pair has been trading in boundaries of a channel up pattern that was formed on September 11, 2013. The pair still can drop around 85 and 200 pips before reaching pattern's support and 100-mark respectively. The key support level is located around 101.67-50 represented by a weekly S1 and pattern's support, while long traders should focus on a weekly R2 and May 23 high at 103.77.
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