USDJPY Forecast: Fed-BOJ monetary policy divergence

Fundamentals:
According to the Reuters : The time is not yet ripe to unwind our monetary easing, including ETF buying, as inflation target of 2 percent still remains elusive, Bank of Japan (BOJ) governor Kuroda said on Thursday.

Highlights:

BOJ will telegraph guidelines on exit from easy policy when inflation approaches our target.

There is no need to ease monetary policy further now and added that there is no preset idea on what tools the central bank should use if it needs to ease more

Don’t think BOJ’s ETF buying is creating big distortions in the stock market.

BOJ does not target specific stock price levels in buying ETFs.

It is true that monetary policy is only among various factors that affect inflation.

What we understand is that Mr Kuroda is still happy with low Yen value.

Shortly : On the BoJ side “it is too early to taper or unwind its massive monetary easing”. Meanwhile, the Fed is set to hike rates in December and may deliver more hikes in 2019.

Technically:

Anka is trading in a triangle on the bigger picture making higher lows / lower highs. 112.200 Cloud base and SMA 100 remains as a strong support. Taking into account the growing monetary policy divergence of the Central Banks, the possibility of a firm breakout of this support is too weak.

Intraday Levels:

Upside: 112.900 113.080 113.280

Downside: 112.500 112.309 112.200

Employment and Hourly Earnings data of today may determine the midterm direction of the pair.