The increasing differences between BoJ and Fed give rise to a USD/JPY growth

Bank Of Japan left its monetary policy unchanged, maintaining its optimistic view of the economy, arguing that a solid recovery would gradually accelerate inflation in the country without additional incentives. Inflation is currently far from the desired two percent at levels of 0.4%, with forecasts for a smooth rise.

One of the new members of the BoJ board, Goushi Kataoka, opposed the decision to keep interest as he believes that current monetary policy is insufficient to boost inflation to 2%. However, the decision was made 8 to 1 votes to save current monetary policy.

With the bank's decision, the yen traded calmly, and given the increasing differences in the monetary policies of the BoJ and Fed, we expect the USD/JPY growth to continue. On the other hand, the probability that Trump's tax reform will become a reality is rising and geopolitical tension is declining. This supports the dollar and depreciates the yen as a safe haven instrument.

Technically, the USD/JPY is at a key level, crawling 200SMA in the upward direction and is close to a 50% correction of Fibonacci. In the Fibonacci break, the level along with the medium-term positivism will increase and we are more likely to see a rise in the pair's price.

Source: Bloomberg Pro Terminal

Jr Trader Petar Milanov

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