2016-09-26 16:40:16

Review and dynamics
At the meeting last week, the Bank of Japan left deposit rates at the level of -0.1%. Target volume of purchase of Japanese government bonds was left at the level of 80 trillion yen per year. ETF was also remained unchanged. The Bank of Japan introduced a zero target level for the 10-year interest rates, in order to fight against deflation.

Today, the head of the Bank of Japan's Kuroda supported new monetary policy in his speech. However, he also said that now the Central Bank is aimed at maintaining inflation and the Bank has necessary tool to do it. He also said that that purchase of government debt may not reach the level of 80 trillion yen per year.

With the opening of today's trading day and after the speech by Mr Kuroda, the decline in the pair USD/JPY accelerated in the European session.

Our opinion
Since the mid-June the pair USD/JPY has moved in the range of 106.50 and 100.00 (annual lows), below the key resistance level of 104.20 (ЕМА200 on the monthly chart). Two other strong resistance levels are 107.35 (ЕМА200 on the weekly chart) and 107.90 (ЕМА200 on the daily chart) and they prevent the rise in the pair USD/JPY in the medium-term.

Break out of the level of 104.20 (highs of September and ЕМА200 on the monthly chart) may trigger the rise in the pair to resistance level of 106.50 (Fibonacci 23.6% against the decline in the pair from the level of 125.65 since June 2015).

Today, the pair USD/JPY has broken down support level of 100.60 trying to reach psychologically important level of 100.00. In case downward movement and break down of the support level of 100.00, the pair can continue to decline to 96.50 (lows of October 2013).

Support levels: 100.00, 99.00, 97.50 and 96.50.
Resistance levels: 102.30, 102.85, 103.50, 104.20, 105.00, 106.50, 107.35 and 108.25.

Trading tips
Buy Stop: 101.10. Stop Loss: 100.70. Take-Profit: 102.30, 102.85, 103.50, 104.20, 105.00 and 106.50.
Sell on the market. Stop Loss: 100.70. Take-Profit: 100.00, 99.00, 97.50 and 96.50.

Breakout of the level of 100.60
Breakout of the level of 100.60

Short-term descending channel
Short-term descending channel