The US Dollar at the end of the Asian session is in a fairly strong defensive situation, which is being used effectively by commodity currencies like AUD and NZD (which are additionally supported by reports from the Middle Kingdom). According to the latest reports, the Communist Party of China seeks to preserve the status quo by abolishing the limit of the presidency of Xi Jinping. The spotlight is also the pound sterling (up 0.3%) stabilizing the GBP/USD pair around 1.4020. The market speculates that a part of the observed movement on pairs with the pound is due to the statements of Dave Ramsden, vice-governor of the Bank of England, who in an interview for the Sunday Times decided on more hawkish hints regarding the pace of interest rate hikes.
On Monday 26th of February, the event calendar is light in important news releases, but the market participants should keep an eye on ECB President Maro Draghi speech and New Home Sales data from the US. Late in the night, New Zealand will issue Trade Balance data as well.
USD/JPY analysis for 26/02/2018:
Bank of Japan Governor Haruhiko Kuroda reaffirms his view that the BoJ needs to continue with the current powerful monetary easing program to achieve its 2.0% inflation target. Kuroda said in Japanese parliament that "prices are gradually rising more and more", but "delay in achieving 2.0% inflation target is regrettable". Moreover, he added, that "Japan's economy is expanding very smoothly, needs persistent monetary easing. So far there is no plan for a comprehensive assessment of BoJ policy at this point and continuing powerful easing is essential for reaching 2.0% inflation target". In conclusion, no change in BoJ monetary policy on the horizon.
Let's now take a look at the USD/JPY technical picture in the H4 time frame. The market is falling after Kuroda comments and currently has broken below the support at the level of 106.83 and is testing the support at the level of 106.41. The market conditions are oversold, so there might be a chance for a further bounce towards the level of 106.83 and even 107.15, but as long as the resistance zone between the levels of 108.12 - 108.43 is not clearly broken, the bears should remain in control over this market.
