Bank of Japan continues to disappoint buyers of yen

The current week is extremely busy in terms of activity of the Central Banks. The Bank of Japan, the Fed, the Bank of England (not counting the meetings and decisions of less significant Central Banks such as the Bank of India) announce their decisions on the parameters of monetary policies. So far, everything passes without surprises. Initially, the Bank of Japan, and then the Fed, left the parameters unchanged. But if the dollar by and large ignored the results of FOMC meeting, then the reaction to the decision of the Bank of Japan was more aggressive. Therefore, let's talk in detail about this, as well as the prospects for the Japanese yen in this light.

The Bank of Japan has traditionally left the parameters of monetary policy unchanged. What played a cruel joke with the yen. The fact is that many expected hints or direct indications of a gradual departure from the ultra-soft monetary policy in Japan. But this did not follow. The Bank of Japan once again confirmed adherence to ultra-low rates both in the short and long-term periods.

That is, the basic reason for the weakening of the yen has not disappeared anywhere and does not plan to do so in the foreseeable future. At the same time, the consensus on the market is that the ECB will start raising rates in 2019.
Thus, the fundamental basis contributes to the growth of the EURJPY pair. Moreover, the weakness of gold recently shows that the demand for safe heaven assets is weak, which means that this factor will not be able to support the Japanese yen, which is traditionally considered a safe haven in the foreign exchange market.

Given that recent macroeconomic statistics also play against the yen (Japan's industrial production fell sharply in June: -2.1% at the forecast of -0.3%, and unemployment on the contrary grew 2.4% vs. the forecast of 2.3%), there is every reason to expect further growth of the EURJPY pair. The minimum growth targets for the pair are around 131.50-132.00, but it is possible that the euro will strengthen against the yen up to 135 in the foreseeable future.

Our recommendations - buying a pair from the current prices.