USD/JPY Tanks After BOJ Decision – Sells the Fact

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The Bank of Japan announced a 2% inflation target, open ended buys from January 2014 and additional steps. Most moves were expected. USD/JPY sells the fact:

USD JPY Tanks after BOJ DecisionThe BOJ committed to fighting deflation, something that isn’t new. The 2% inflation target is new, but was widely expected. Also open ended action (Fed-style) was discussed, but perhaps the markets wanted to see an immediate open ended bond buying move before selling more of Japan’s currency.

The BOJ certainly caved to pressure coming from the new government led by Shinzo Abe. The LDP won a landslide victory and vowed to stimulate the economy. Elections for the upper house are held in July. The current coalition has a two thirds majority allowing it to bypass the upper house, but the LDP wants more power.

Dollar/yen traded around the critical 90 line and fell immediately after the announcement to 88.85, stabilizing above the 89.10 line afterwards.

Further support is at 88.40. A break above 90 seems somewhat unlikely now. For more lines, see the USDJPY forecast.

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About Author

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 the 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.

13 Comments

  1. Hi Yohay,

    I am a bit confused. After reading this article and comparing your weekly outlook for USD/JPY, they are contradicting. I mean it is normal in forex world, but the wordings are not encouraging.

    This article:

    Most moves were expected. USD/JPY sells the fact.

    Weekly outlook:

    Even though the moves were rumored, we will probably not see a “sell the fact” move, but rather more weakness of the yen.

    • Sorry for the late reply. I expected the BOJ to announce bigger steps, that would push the yen lower. Eventually the BOJ decided only on the expected steps, and indeed sold the fact, contrary to what I had expected in the weekly USD/JPY outlook…

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