The greenback has fallen more than 5 percent against the Japanese yen since the Fed’s March meeting. That was when the Fed signaled that they might not raise interest rate too fast.
Japanese Prime Minister Shinzo Abe won the election in late 2012 mostly because of his promise that his administration would do everything it could to revive Japan’s economic growth and inflation.
To maintain price stability is one of Bank of Japan’s main duty. The central bank target is to set a price stability target of 2% growth measured as measured by yoy change in the CPI back in January 2013, shortly after Shinzo Abe took an oath as prime minister.
Since then, the BOJ has fallen short of this target even though they have prompted a massive stimulus measures. Japanese CPI yoy gained only 0.3% in February, while core CPI yoy gained 0.8%.
A pull-back move has occurred into the Fibonacci support area at 109.113-108.853. The price currently is moving between 20 MA and 50 MA on hourly chart and both MA are still rising. Hourly stochastic has crossed up and CCI is oversold. As today’s trading strategy, it is better to wait for bullish signal confirmation within the Fibonacci support area as signal to go long with target at 109.274-109.535.
We should be careful if the price managed to break below the support at 108.853 because it will turn the intraday bias to bearish and possibly will be followed by a bearish move to 108.667-108.431.