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USD/JPY Plunges as BOJ Easing Falls Short of High Hopes

Dollar/yen took a big dive of 50 pips from nearly 80 to below 79.50 after the decision by the Bank of Japan was released.  

The BOJ enlarged the quantitative easing program by 11 trillion yen. Official expectations stood on 10 trillion, but expectations have risen considerably towards the event, pushing the yen higher.

USD/JPY plunges on 11 trillion yen easing October 31 2012
USD/JPY plunges on 11 trillion yen easing – Click image to enlarge

Pressure from Japanese politicians towards the elections, a worrying trade balance deficit, weaker than expected retail sales and other factors led many to whisper (or talk out loud about yen printing worth 20 trillion yen.

However, the updated forecasts by the central bank do leave room for more action in the future, assuming all the other factors remain unchanged: prices continue falling and the economy still struggles. Also the dispute with China over the islands weighs on the economy.

The next significant support line is at 79.05. 79.70 turns into weak resistance. For more on the yen, see the dollar/yen forecast.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.