Overnight, the Summary of the Opinions of the last Bank of Japan meeting was published. This report includes the BOJ's projection for inflation and economic growth. It's the primary tool the BOJ uses to imform investors about their economic and monetary projections.
According to the central bank's management, the risk of the global economic slowdown is growing. Recent data indicate a slowdown in the Chinese economy, which will also have a negative impact on Japan. Inflation is still on the upside, but the impact of cheap oil can slow its growth. The future price growth forecast is uncertain, for now, it is unsatisfactory. One should carefully assess the benefits and costs of running the current monetary policy. The Bank of Japan must be sure that it supports the economy without putting it off balance.
The early normalization of monetary policy may lead to lateral effects and to eradicate the progress made so far. This is why the central bank must tolerate the policy of long-term interest rates below zero.
Let's now take a look at the USD/JPY technical picture at the H4 time frame chart. The market did not manage to break through the short-term trend line (dashed black) around the level of 111.00 and reversed towards the technical support at the level of 110.37. If this level is violated, then the next target for bears is seen at the level of 110.15 and even at the swing low at the level of 110.02. The momentum remains below its 50 level, supporting the short-term bearish outlook for this pair.
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