The economic calendar is still light with Tier 1 data releases but last night we had the Bank of Japan’s (BoJ) announcements following on from their monetary policy meeting.
The BoJ is going to keep the interest rate negative for the foreseeable future and will keep with the yield curve controls. The idea is to keep the bank's interest rate at -0.1% and target 10-year JGB’s around 0% and somehow create 2% inflation. This policy is over 2 decades old now and for all outside onlookers, the evidence doesn’t look good that the central bank is winning the race to create inflation.
The BoJ is going to keep on with this monetary policy for "as long as it is necessary for achieving that target." said to take additional measures if necessary, in order to combat the negative effects of the coronavirus disruptions.
The BoJ board members estimate the consumer price index (CPI) for the full year 2021 will stand at 0.1%, which is a drop from their previous estimates of 0.5%. In good news, the real gross domestic product (GDP) is seen at 4%, which is edging slightly above January's estimate of 3.9%.
The USDJPY tagged the daily 50 exponential moving average which is found to be near-term resistance. The price action from the beginning of March is unlikely to act as support until the price works its way down to 106.75 with the main level of support being from the swing high printed on the 17th February around the 106.00 price level. We also have the 200-period moving average just above the 106.50 level which could act as both a target to the downside and then some support though on review of the last few years of price action, the USDJPY doesn’t tend to respect the 200ema.
The ActivTrader sentiment indicator shows that 60% of traders on the platform are still bullish the USDJPY and with the yen being a risk-off go to when the markets are fearful, this sentiment reading suggests that traders are generally feeling optimistic for the markets.
The US dollar index is doing its best to hold on to the $91 level but is currently trading below at $90.950. Yesterday’s candle closed bearish for the day but it was a small indecisive candle which in the context of Friday's drop could be the blueprint for today as the US dollar is likely to be waiting for the real key data out of the USA this week, which includes the FOMC and GDP. If you draw a trend line through the closes of the candles on the daily chart, we see that the current price is finding support at the trend line. This may give us an indication of when to be looking for a breakdown of prices to trade or if the data comes in better for the US dollar, somewhere to keep our stop when managing risk for speculative long positions.
In earnings news, Tesla beat earnings expectations and this could be put down to their Bitcoin investment. Which may give other companies that are struggling to sell products and have production disruptions something to think about. Tesla is trading at $737.760 and looks to be consolidating between the $900 high and $590 lows. On the chart, the price is above the Ichimoku cloud and could now be showing that $700 is key support for this stock to build upon.
Later today we learn about some of the biggest names which include Alphabet (Google), Microsoft, UPS, Visa, and 3M.