By eToro – Japanese CPI figures published this morning continued to point on subdued customer demand. Core CPI continued to fall for the 12 month in a row, falling by -1.2% YoY in February and raising speculations that the BoJ will be forced to extend its liquidity facilities .Investors’ speculations over a BoJ stimulus which looms the Yen for several month have intensified recently as investors bet the Government will place pressure on the BoJ to act amid the upcoming upper house elections. Such circling speculations were largely confirmed by the Japanese finance minister who was quoted saying “more has to be done”. Not so long ago investors assumptions were that the US will suffer the same low growth low inflation environment as Japan causing the Yen to dip the 85 level and gain strongly against the Dollar. However with the US GDP rising by 5.9% YoY and the Fed action to end mortgage paper purchases and squeeze excess liquidity out of the system, fundamentals for the USD/JPY trade are changing. It seems that with the Fed ending stimulus and BoJ the about to give stimulus Yen traders are more than willing to price the 85 zone as a firm bottom for the USD/JPY. Yesterday’s daily close above the 91.5 key resistance only confirmed the pair’s journey to the 100 is well in place.
USD.JPY, Daily Chart
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