Global macro overview for 22/01/2018

During the night, we have a meeting of the Bank of Japan, which has gained in importance due to a growing global investors speculation regarding a possible tightening of monetary policy (after the bank reduced the pool of purchased government bonds). Nevertheless, market participants expect that BoJ will remain dovish, and Governor Kuroda's will emphasize that the main policy tool is the control of the yield curve (maintaining the yield of 10-year bonds close to 0%). If the message is supported by the lack of an increase in core inflation forecasts, due to strong JPY, this may reverse the recent USD / JPY decline.

It's among the primary methods the Bank of Japan uses to communicate with investors regarding monetary policy. It covers the factors that affected the most recent interest rate decision, the overall economic outlook, inflation, and clues regarding future monetary policy.

Let's now take a look at the USD/JPY technical picture at the H4 time frame. The market corrective rally was rejected at the 38% Fibo at the level of 111.40 and since then the price declined towards the nearest technical support at the level of 110.61. The momentum is still hovering around its fifty level, so it is very likely the down move to be continued.


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