First of all It's gonna be the "chaos market" of USDJPY start from monday.
Since It reached above the 0.25% of Japanese 10Y treasury yields.
0.25% is the upper control limit which BOJ's one of the current monetary policy.
And I guess your question will be "Then what is gonna be?" right?
Well, BOJ does BUY the Japanese 10y bonds NO-LIMITLY from monday until the yields move back to below 0.25% level.
So Yes, It is the obvious signal that BOJ keeps QE even though traders betting that They will be ending current monetary policy soon or later.
But the things ain't so simple right here in Japan.
Japanese Consumer Price Index has just been reached more than 2% target last month, but This is the different type of inflation compare to US/EU's inflation.
US and EU's inflation type is "DEMAND PULL" that strong demand with weak supply-chain.
Japanese inflation typle is "COST PUSH" that high energy prices push producing costs.
As you know that tightening monetary policy is affective for "demand pull" type of inflation, not for "cost push" type of iflation.
because most of Japanese don't have as strong as desire.
USDJPY still goes up from monday because of what I told you just then, but I am considering that current up-ward trending is way too steep.
It seems like It will break new high right now but Is it trustable?
Well, my answer is "NO"
As you see the arrows on my original chart shows my projection.
Senario 1: Breaks out the 135.590 which is untrustable untill it strongly supported around 135.590.
Senario 2: Stays high but It does not break the resistance.
Senario 3: Breaks the support level of fib 23.6% rate of 134.580.
Finally, If you will be in a middle of somthing next week, You should not trade USDJPY such as cross yen paires.
And also Be careful when Japanese CPI releases at 8:30 friday morning.
Since It reached above the 0.25% of Japanese 10Y treasury yields.
0.25% is the upper control limit which BOJ's one of the current monetary policy.
And I guess your question will be "Then what is gonna be?" right?
Well, BOJ does BUY the Japanese 10y bonds NO-LIMITLY from monday until the yields move back to below 0.25% level.
So Yes, It is the obvious signal that BOJ keeps QE even though traders betting that They will be ending current monetary policy soon or later.
But the things ain't so simple right here in Japan.
Japanese Consumer Price Index has just been reached more than 2% target last month, but This is the different type of inflation compare to US/EU's inflation.
US and EU's inflation type is "DEMAND PULL" that strong demand with weak supply-chain.
Japanese inflation typle is "COST PUSH" that high energy prices push producing costs.
As you know that tightening monetary policy is affective for "demand pull" type of inflation, not for "cost push" type of iflation.
because most of Japanese don't have as strong as desire.
USDJPY still goes up from monday because of what I told you just then, but I am considering that current up-ward trending is way too steep.
It seems like It will break new high right now but Is it trustable?
Well, my answer is "NO"
As you see the arrows on my original chart shows my projection.
Senario 1: Breaks out the 135.590 which is untrustable untill it strongly supported around 135.590.
Senario 2: Stays high but It does not break the resistance.
Senario 3: Breaks the support level of fib 23.6% rate of 134.580.
Finally, If you will be in a middle of somthing next week, You should not trade USDJPY such as cross yen paires.
And also Be careful when Japanese CPI releases at 8:30 friday morning.