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"While the Bank of Japan refrained from announcing more stimulus at today's meeting, we think that the recent recovery in inflation will stall soon. The upshot is that further monetary easing is still likely to be required."
- Capital Economics (based on WBP Online)
Pair's Outlook
The BoJ leaving its monetary policy unchanged in spite of weak inflation data caused rather strong downside volatility in the USD/JPY this morning. However, a broadly stronger US Dollar remained unchanged against the Yen yesterday, when GDP figures disappointed, and it is not allowing the Japanese currency to maintain trade below the 121.00 level today. The worst case scenario is a drop to 120.20, the area between the 20 and 55-day SMAs, but technical studies suggest a rally. Gains are likely to be limited by the 100-day SMA and Aug 27 high around 121.80.
Traders' Sentiment
More traders retain a negative outlook towards the Buck, namely 62%. The share of buy orders, however, increased from 74 to 78%.
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