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The Bank of Japan Retained the Main Parameters of Monetary Policy

12/20/2022 10:47 AM

The USD/JPY pair shows a steady decline, renewing the lows of mid-August, against the background of the strengthening of the Japanese yen, which received an impetus to grow after the meeting of the Bank of Japan.

As expected, the main interest rate remained at -0.1% per annum, but the regulator decided to double the upper limit of the key rate for long-term loans from -0.5% to 0.5%. Against this background, the efficiency of investments corrected from 0.25% to 0.50% while maintaining the target return of 0.0%. At the moment, according to the report, the Bank of Japan bought up more than half of its long-term debt. By their decisions, officials confirmed movement towards curtailing the program aimed at combating deflationary phenomena in the national economy. Analysts expected officials to take such steps closer to April next year, when the regulator's Governor, Haruhiko Kuroda, is due to resign. According to October statistics, inflation in the country reached its peak since January 1991 at around 3.7%, and the growth rate of consumer prices excluding fresh food was 3.6%, but the country's financial authorities are still confident that this is a temporary phenomenon, and predict a downward correction in the next fiscal year. On Friday, investors expect the publication of updated November data on inflation dynamics in Japan.

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is expanding slightly but it fails to conform to the surge of "bearish" activity at the moment. MACD is reversing downwards forming a new sell signal (trying to consolidate below the signal line). Stochastic shows similar dynamics, rapidly approaching its lows, pointing at risks associated with the US dollar being oversold in the ultra-short term.

Resistance levels: 133.61, 134.50, 135.57, 136.50. | Support levels: 133.00, 132.00, 131.00, 130.00.

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