Although we have experienced an incredible boost this week for the Japanese currency, market seems to push the pair back and could attack ¥125 level again soon.
Bank of Japan’s Governor Haruhiko Kuroda informed early on Thursday that “its hard to see the yen’s real effective rate falling further.” Such comment helped the yen to leave previous 13-year low, advancing even below ¥123 handle.
Nevertheless, BoJ keeps its ultra-loose monetary policy further, helping the yen only by comments, what can not hold traders away from dollar-bullish position when it comes to optimistic US dollar sentiment.
Besides this, we could see from the BoJ only expected comments like improvement in business fixed investment seen, households, employment experienced better conditions, income situation is getting better and the price target seems to be reached during first half of the next year, the major topic remained in focus – the exchange rate of the Japanese currency.
Naturally, yen dropped markedly from the around ¥80 levels before the massive asset-purchase program but according to actual predictions, we can not count on bearish pressure to stop, only to slow down, as US liftoff is being the hot topic of 2015 with speculators betting on the exact time for the first tightening.
From the fundamental point of view, due to divergent path of monetary policies of both countries in 2015, we still remain bullish on USD/JPY (bearish on yen), expecting the pair to cross again the ¥125 level and to remain at least steady above the level for a longer period, until optimistic news about Japan’s economy, justifying any adjustment to BoJ’s policy, come out.
From the technical point of view, we can see next resistance level at ¥124.220 and further one above ¥125 handle at ¥125.650.
In case of further yen’s strengthening, take profit positions may be set on ¥122.875 level or lower at ¥121.914.
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