Bank of Japan On Hold at 0.5%. Eur/Jpy Review

The BOJ have held rates at 0.5%. The move to hold was as expected, but does bring into focus the question of how the Japanese economy will cope with the slow-down of a huge part of its export market; the US.

The valuations on the Yen are not helping those exporters, and a move higher by the cross-pairs is something that the Finance Ministry will be glad to see. If global equity markets can find a base it may lead to appreciation in the Eur/Jpy, and may offer a test of the 166.00 area over the coming sessions. The next BoJ meeting is on the 30th April.

Forex Technicals; The Eur/Jpy is lower since the start of the new trading day and has seen some downwards pressure since the announcement. Movement in the pair may be muted until the BOJ releases the monthly statement this morning. The Daily Chart analysis shows the 161.20 area is acting as Resistance and Trade Desks may now be looking at that area.

Daily Trend; Long
The RSI indicator is in Long mode, and the pair has held the 100 SMA as Support around 159.50. The 200 SMA as Resistance will be a harder adversary at 161.20.

4 Hour Trend; Long
The pair is in Long mode, and now looking to consolidate the moves higher. This is now all about positive equity days; if global markets move higher the break-out through the trend-line from Monday could easily hold.

1 Hour Trend; Long
Some explosive moves higher in recent trade have fizzled out at the 200 Day SMA area at 161.20. This one looks as though it could hold even though the trend-line is now moving sideways; it held today even with a wobbly Wall Street.

Trade Desk Thoughts; There had been recent rumblings that the Bank of Japan is close to lowering rates in order to stave off a recession. The BOJ however, really had no choice but to keep rates on hold this time. There is not much wiggle room since the rate is only at 0.50% and providing too much stimulus to the economy could jeopardize long term growth


"The Bank of Japan kept interest rates on hold at the 1st meeting chaired by Masaaki Shirakawa amid concern the economy may slip into a recession. Shirakawa, who the opposition controlled upper-house today approved as governor, and his 6 member team left the key overnight lending rate at 0.50%. The decision was unanimous. Recent economic data has been mixed, with export growth and inflation accelerating as corporate sentiment fell to a 4 year low and production slowed. Shirakawa reiterated yesterday that the bank is ready to act flexibly if needed."

Tony
TheLFB Team
http://forexfactory.com/news.php?do=news&id=80194
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