The US Dollar Index, which shows the purchasing power of the dollar to a trade-weighted basket of six major currencies, slightly changed at position 90.14 during the day, remaining close to a low of 89.96 in three years, which was fixed on Friday.
This was the statement of the head of the Bank of Japan on the preservation of soft monetary policy. The central bank of Japan is not going to curtail the financial incentive program. Recall that on 23.01.18 at 16:39 Moscow time, the pair USD / JPY decreased by 0.47% to 110.38, approaching the minimum for four months of 110.18, which was fixed last Wednesday, the yen’s rate itself fell to a minimum session after the Governor of the Bank of Japan Haruhiko Kuroda stated: “At the moment, the target inflation rate of 2% has not yet been reached, and until now there is no point in talking about tightening the monetary policy of the central bank of Japan. Nevertheless, we expect the inflation rate to be 1.4% for the year to March 2019. ” Statements Kuroda dispelled rumors that the Bank of Japan will soon follow the example of the ECB and the Fed and begin to wind down the quantitative easing program.
At the same time, the dollar keeps at three-year lows against the euro, and today its recovery is unlikely. The euro / dollar pair will remain around 1.225.
This situation in the financial market is also caused by the unstable political situation in the United States. “Today, the US government resumed its work, as the Congress yesterday passed a bill on the temporary extension of government funding (for the fourth time) until February 8. Representatives of the Democratic Party agreed to approve this decision after the Republican leaders promised to discuss a bill on immigration, “analysts of Sberbank CIB Tom Levinson and Yuri Popov said.
This bit supported the dollar, but for a small time, since he, again began to weaken. Democrats and Republicans still strongly disagree on immigration issues, so it is unlikely that a final budget financing bill will be adopted in three weeks, and the activities of the US federal government can again be suspended.
Possible development of the market
The euro / dollar pair remains positive, trading above an important support level of 1.22, which corresponds to the Fibonacci level of 50% correction to the fall from the level of 1.3900, which began in May 2014. Nevertheless, the movement of the euro / dollar pair is projected in the daily range of 1.2223 – 1.2306.
But the pair USD / JPY – The US dollar The Japanese yen continues to fall. This dynamic will continue until the resumption of the stable operation of the US government. Experts estimate the daily range of 110.25 – 111.18.