2612 USDJPY still got more than 400 pips up to rise!

Hello traders,

The latest speech by Bank of Japan Governor Kazuo Ueda stated:

★ Even if the economy and prices improve, maintaining the current low interest rates could make monetary policy too loose. An overly loose monetary environment may force the Bank of Japan to significantly raise interest rates, which would be detrimental to long-term economic growth. The timing and pace of further adjustments to monetary support will depend on the economic, price, and financial conditions at that time.

★ If monetary policy remains too loose, it may force the Bank of Japan to raise interest rates quickly, which would have a negative impact on sustainable economic growth.

★ There is a high level of uncertainty regarding the overseas economic outlook, especially concerning the economic policies of the incoming U.S. administration. U.S. policies could have a significant impact on the global economy and markets, so the effects on the Japanese economy and prices must be studied carefully.

Interestingly, this statement was interpreted by the market as "a cautious attitude towards changing interest rate policy," meaning that the Bank of Japan may not raise interest rates in the near term. Following the speech, the dollar-yen exchange rate rose by 0.1%.

However, before the December monetary policy meeting, about 86% of economists surveyed by the media indicated that the timing for raising interest rates has matured. The Japanese inflation data released on Thursday was not ideal:

- November CPI rose 2.9% year-on-year, accelerating from October's 2.3%;
- November CPI (excluding fresh food) rose 2.7% year-on-year, up from a previous value of 2.3% and an expected value of 2.6%;
- November CPI (excluding fresh food and energy) rose 2.4% year-on-year, compared to a previous value of 2.3%.

The CPI growth reflects that the impact of government energy subsidies and rising food prices is gradually fading, and potential inflationary pressures in Japanese society are building up.

In this context, is the market's understanding of the Bank of Japan's speech as "not preparing to raise interest rates" and continuing to implement a loose monetary policy overly optimistic?

Technically, USDJPY is still running above EMAs on daily chart. I would really like to wait for a retest of red EMA and reentre to long this pair again, up to target FIBO EXT 1.27 161.50.

What is your plan ?

Happy new year!
LESS IS MORE!