Bank of Japan May Drop Yen

FX_IDC:USDJPY   U.S. Dollar / Japanese Yen
USDJPY came closer to key support around 111.70 level, losing more than 200 pips during the last week. However, the key role in such a move was played by disappointing data from the USA, rather than positive one from Japan.
However, tomorrow the 2-day Bank of Japan monetary policy meeting ends, and the regulator got into troubled waters . First, the appreciation of local currency is not favorable for export oriented economy of Japan. It makes local goods more expansive at the world arena, meaning less competitive. So, the regulator has no reason to support yen.
Second, the inflation target of 2% is far away, and there are very low chances could be reached by the next year. And if we go back to history, last time the Japanese premier thought the BOJ chairman had not eased monetary policy enough, he was shown the door. The same lot may await Kuroda, and this is the key reason he could give more dovish comments than expected on Thursday.
And this will be enough to send yen lower. USDJPY may rebound from the current support around 111.70 and target 112.40 followed by 113.00


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