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Bank of Japan Continues its Ultra-soft Monetary Policy

3/15/2023 12:26 PM

Against the negative dynamics of the American currency, the USD/JPY pair is correcting at 134.51.

The yen is trying to grow against the publication of the report of the Bank of Japan meeting: no global changes in monetary policy have been made but there were some adjustments. Thus, the regulator has appointed additional auctions for the sale of government bonds, and 10-year bonds will be offered for purchase at a rate of 0.5% every business day through consolidated-rate transactions. Also, the agency will independently increase the volume of buyouts of government bonds from the market at a consolidated rate and will continue to purchase exchange-traded funds and real estate trusts with a cap of about 12.0T yen and 180.0B yen, respectively, as well as corporate bonds to return their outstanding value to 3.0T yen, as it was before the coronavirus pandemic.

The US currency is weakening, trading at 103.100 in the USD Index. The February report on consumer prices justified the expectations of experts, and there was almost no reaction from the market: the indicator increased by 0.4% in February, which led to a slowdown in annual growth to 6.0% from 6.4% earlier, and the core inflation rose by 0.5%, declining to 5.5% YoY from 5.6% earlier.

On the daily chart, the trading instrument is moving within a corrective trend, holding below the support line of the local channel at 134.00.

Technical indicators are in a buy signal that has almost changed to a downside one: fast EMAs on the Alligator indicator are actively approaching the signal line, narrowing the range of fluctuations, and the AO histogram is forming downward bars above the transition level.

Resistance levels: 135.60, 137.90. | Support levels: 133.20, 130.50.

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