USD/JPY: In Anticipation of the Meeting of the Bank of Japan
Last Friday the pair USD/JPY rose by 2.0% up to 3-week highs at the level of 111.80. The rise in the pair was caused by expectations of the lowering in the interest rates by the Bank of Japan this week, which will be the continuation of the policy of the negative interest rates of January. The increase in the pair last Friday was also triggered by the closure of the long positions on the Yen and taking profit by the investors after the pair has reached the record level of 108.00 in April. Since the beginning of February the pair has lost over 1300 points due to expectations of the interest rates increase by the US Fed. The decline was also caused by the lack of confidence to the monetary policy of the Bank of Japan.
The rise in the Yen takes place amid negative Japanese macro-economic statistics and increasing demand for safe-haven assets caused by uncertainty in the financial market and in the global policy.
Since opening of the trading session today the pair is undergoing correction against the rise last Friday It is possible that the pair will continue to rise in anticipation of the meeting of the Bank of Japan on 27-28 April.
On Wednesday, US FOMC meeting will be held. Although the interest rates are likely to remain unchanged, US Fed executives may express positive opinion about economic development in the country, which will indicate possibility of the interest rate increase in future. This fact will have a positive impact on the pair USD/JPY.
If, this week, the Bank of Japan softens monetary policy this week, the pair USD/JPY may quickly grow up to the levels of 114.75 and 115.00.