USD/JPY: if the Bank of Japan will take additional stimulus measures _25/04/2016

Trading recommendations

Sell ​​Stop 110.80. Stop Loss 111.20. Take-Profit 110.00, 109.50, 108.00

Buy Stop 111.50. Stop Loss 110.90. Take-Profit 111.90, 112.15, 113.45, 114.75, 115.45


Technical analysis

With the opening of today's trading day the USD / JPY pair is reduced by adjusting to the Friday's growth. In a significant corrective upward movement last week, the pair USD / JPY found resistance near the level of 111.90, which passes through the EMA50 on the daily chart. A little higher, at around 112.15 level is the Fibonacci 23.6% correction to the strong decrease in the pair since early February. In less than 2.5 months it fell by more than 1300 points at the level of 121.30, having reached record lows near the 108.00 mark (EMA200 on the weekly chart). However, the daily chart indicators OsMA and Stochastic crossed over to the buyers.

On the weekly chart indicators also unfold on long positions. The corrective upside price broke through the resistance level of 111.00 (EMA200 the 4-hourly chart) and EMA144 (Weekly chart). If the growth continues, but now, this level will be for a couple of important support level.

Once indicators OsMA and Stochastic on the 4-hour chart will go to the buyer's side, it is possible to resume consideration of long positions.

After fixing prices above the level of 112.15 (23.6% Fibonacci level) pair growth will accelerate. The objectives may be levels of 114.75 (38.2% Fibonacci level), 115.45 (EMA144 on the daily chart), 116.85 (Fibonacci level 50%).

Otherwise, if investors are disappointed by the decision of the Bank of Japan and the Fed comments this week, the decline in the pair will resume towards the recent lows near the 108.00 mark.

Support levels: 111.00, 109.50, 108.00

Resistance Levels: 111.90, 112.15, 113.45, 114.75, 115.45


Overview and Dynamics

As was stated by Advisor to the Prime Minister of Japan, Honda, to sustain the Japanese economy and the acceleration of inflation is necessary to further easing of monetary policy.

According to Honda, the new Bank of Japan easing policy could happen in June, unless there is a strong deterioration in the economic situation. Nevertheless, the Government of Japan as Honda said it is necessary to maintain readiness for currency intervention. He also noted that "abenomics" needs a new phase of the combination of fiscal and monetary stimulus.

Last week in the media and it was reported that the Bank of Japan, perhaps as early as this week, will increase announced in January a policy of negative interest rates. On Friday, the USD / JPY pair rose more than 2.0% to 3-week high near 111.80 mark. Since early February, the pair has lost more than 1,300 points under the influence of expectations that the Fed will not raise interest rates in the near future, as well as the lack of confidence in the monetary policy of the Bank of Japan.

The strengthening yen is also accompanied by negative macroeconomic data from Japan, coming out lately, as well as increased demand for safe haven against the backdrop of uncertainty in global financial markets and the political arena.

With the opening of today's trading day, there is correction to the strong strengthening of USD / JPY last week. However, it is possible that the pair will continue against the backdrop of the upcoming 27-28 April meeting the expectations the Bank of Japan.

Also Wednesday, a meeting of the Committee on the Federal Open Market Operations (FOMC). Although interest rates are unlikely to change, however, Fed officials may speak optimistically about the economy signaled further rate hikes. It will also have a positive impact on the pair USD / JPY.

 If this week's Bank of Japan significantly soften monetary policy, it is possible that the pair USD / JPY may rise to levels of 114.75, 115.00 in a short time.