Growing trend of USD/JPY continue

Noam Stiekema

The growing trend of USD/JPY continue at the start of the new week trading, caused by the continuing mass sales triggered after the announcement of additional stimulus by the Bank of Japan. USD mark strong performance against EUR, which recorded a new 2-year low. The sharp market movements in recent days caused mainly by the […]

JPY USD trend

JPY USD trendThe growing trend of USD/JPY continue at the start of the new week trading, caused by the continuing mass sales triggered after the announcement of additional stimulus by the Bank of Japan. USD mark strong performance against EUR, which recorded a new 2-year low. The sharp market movements in recent days caused mainly by the actions of major central banks, which show more clearly that their policies begin to diverge. While the US Federal Reserve gradually transferred to the restrictive policy and the reduction of economic incentives, central bankers in Europe and Japan increasingly dissolved wallet. Monday auctions for JPY continued in full force and currency reached a new 7-year low against USD. On Friday, USD rose by as much as 3% against the JPY after the Bank of Japan issued a surprising decision to increase the incentives to its 80 trillion JPY annually. Meanwhile, the central bankers decided to triple the rate of purchase of high-risk assets.

The pressure on JPY was boosted after it became clear that the long-awaited law changes in Japan’s pension fund was submitted for consideration by the government. If the project is approved, 25% of the fund’s assets will be directed to local and foreign shares. Such redistribution of billions of USD are expected to boost the stock market.

The big question that analysts are asking now is when it will stop upward movement USD against JPY. A large proportion of traders, the answer to this question is in the hands of the Federal Reserve.

The divergence between the monetary policies of Japan and the US expanded more and likely actions of one of the two banks may cause new serious moves in the pair.

Although the focus of the market is entirely directed towards Japan, the EUR continues to lose ground against USD after the Asian session reached its lowest level since August 2012. Estimates are that the EUR will remain around current levels in anticipation of the ECB meeting on Thursday. Attention to the game is more than just once in meetings of central bankers of Japan and the United States have witnessed a significant market movements.

One EUR is exchanged for 1.2550 USD, close to the levels at which the session began. The pair GBP/USD is trading at around 1.6000, having earlier reached a low at 1.5922. At the same time USD is trading around 113.00 JPY, the highest level in more than 7 years.

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