USD/JPY is now extending its falling and trading well below 98. The pair began the day with the news or actually the lack of news from the BOJ. It then got another blow from the weak US GDP.
Will it go all the way to 95 or find a bottom above this line, as it did last week?
The Bank of Japan made no policy changes in its second decision under Kuroda. This was not really a surprise given the ambitious plan that Kuroda presented in the first meeting that was held earlier this month. Nevertheless, it left the yen bears hungry and USD/JPY fell below 99, despite the pledge to enlarge the monetary base. Deflation is still strong in Japan.
US GDP disappointed by rising at an annual pace of only 2.5% in Q1 2013, according to the initial release. A rise of 3 or 3.1% was expected. This pushes back prospects of the Fed tapering down the QE program. The Fed meets on May 1st to make its decision, and the open ended QE program will likely continue as usual.
USD/JPY Chart:
On the daily chart, USD/JPY was very close to the magical 100 line twice in recent weeks. This is a double top. On more detailed charts, the attempts seem even more frequent.
Last week, the pair dropped just under 96 on worries about the G-20. The very light slap on the wrist sent the pair back up. For more, see the USD/JPY Forecast.
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