Forex Technical Update
The Japanese Yen slid after the BoJ announced an increase to the asset purchase program, which translates to expansion of QE (printing more money).
The Bank increases the total size of the Asset Purchase Program by about 10 trillion yen,from about 55 trillion yen to about 65 trillion yen. The increase in the Program is earmarked for the purchase of Japanese government bonds... (BoJ Statement 2/14/2012 PDF)
The USD/JPY has since rallied sharply after failing to break below 77.30 pivot, but mainly because expansion of QE puts downward pressure on the currency. As the US session gets under way, the USD/JPY is cracking an important range resistance just below 78.30. In the 4H chart, it is overbought as the RSI is way above 70, and price is tagging the upper bollinger band (3 std deviations from the 200 simple moving average in this time-frame).
It is also breaking 20o-day moving average in the daily chart. If it were not for this expansion of QE, the market might focus more on the resistance factors, but the fundamental factor here may need further pricing in. We'll see where the market stands after this rally stalls and consolidates. Inability to push back below 77.80 should start the consideration that USD/JPY has bottomed finally bottomed after twisting and turning with bearish bias since October.
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Fan Yang CMT is the Chief Technical Strategist of IBTRADE, trader, educator and a of the main contributors to FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.