After the Emperor’s birthday passed, Yen had limited movement. On Tuesday, The BOJ maintained its YCC limits, buying 400 billion yen worth of bonds and Kazuo Ueda as Kuroda’s successor is scheduled to testify in the upper house of Japan’s parliament this Friday.
Ueda’s comments before the parliament could follow a similar dovish line that Kuroda set during his time in charge. While he may agree academically that ultra-low interest rates are a long-term problem, how to change policy without hurting the economy is a much more complex question going forward.
As a result of external forces, especially rising prices of products and services, inflation is rising in Japan. The big fall in the value of the yen last year amplified this effect, making imported goods much more expensive. Such inflation is considered unhealthy because it is not supported by rising domestic demand from a thriving economy. In fact, rising prices may cause the economy to suffer more. This makes it difficult for the BOJ to start raising interest rates like other central banks. And the significant interest rate differential will still pose a risk for just the future.
Technical revision
EURJPYD1 – A temporary peak was recorded at 144.15 and the daily price bias for the period still shows an upward trend, despite the decline in the last 2 trading days. The price is currently above the adjacent 52-day and 100-day EMAs, and these 2 EMAs are sure to be a dynamic support around the price 142.00. For now, the corrective decline from 148.39 looks finished 137.37. A step up 144.15 could expand 137.37 bounce back to 146.72 another resistance. However, sustained trading below the 52- and 100-day EMAs would suggest that a correction from 148.39 is still underway and could approach the 200-day EMA, around 140.50. RSI showed weakening rally momentum, turning lower before touching overbought levels, while MACD is still dynamically above the buy zone
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Ada Phangestu
Market Analyst – HF Educational Office – Indonesia
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