USD / JPY: the return to the range_23/10/2015

Trading recommendations

Buy Stop 121.20. Stop 120.50. The objectives of 121.50, 122.00

Sell ​​Stop 120.05. Stop 120.70. The objectives of 119.90, 119.60, 118.85, 118.10


Overview and Dynamics

Export-oriented Japanese economy needed a soft monetary policy in the country and a weak yen. If the Fed will not raise interest rates in the United States at the next meeting, on 28 October the risks of monetary easing by the Bank of Japan in the country increased.

October 30 a regular meeting of the Bank of Japan and saved expectations that the bank will take further easing measures, taking into account the reduction in the basic indicator of consumer prices and weak economic data. The increase in the program of asset purchases of up to 100 trillion yen is the most likely course of events.

Earlier, the Bank of Japan's monetary policy remained unchanged at increasing the money supply by 80 trillion yen a year.

Yesterday's growth of American stock indices today with the opening of the trading day as Asian stocks picked up. So the Japanese Nikkei Stock Average on the basis of trades rose by 2.1%, Chinese Shenzhen Composite Index - on 2,9%, ChiNext - by 3.3%.

During today's comments Advisor to the Prime Minister of Japan Shinzo Abe Etsuro Honda, who previously held a post in the Ministry of Finance, he said that to revive the economy, the Government should pour into it an additional 5 trillion yen (41 billion dollars) and to further stimulate with the Bank of Japan is no sufficient reason. However, given the weakening of the Japanese economy and inflation expectations, the Bank of Japan may still express the need for further easing of monetary policy.



Technical Analysis

USD / JPY has returned to the range and a zone of stability, in which it is trading mainly in early September, between the levels of 120.60 (EMA144 and 61.8% Fibonacci level) and 119.60 (EMA200 on the daily chart).

With the opening of the trading day the USD / JPY pair rose together with the Japanese stock index, but then with the opening of the European session the pair fell from recent highs. It is obvious that triggered stop orders near the level of 121.00.

The pair failed to break below last week's strong support 118.85 (EMA50 on the weekly chart).

For further direction of USD / JPY pair need fundamental drivers. And, most likely before the Fed meeting (27-28 October) and the Bank of Japan's (30 October) USD / JPY pair is trading in the range of levels near 119.60, 120.60.