Yesterday the Bank of Japan made an unexpected move to support the country’s economy. It was decided to expand the QE program by $130B.
This happened a few days after the GDP report for Q4 2011 showed a 2.3% decline, thus coming out worse than expected. The Bank of Japan left the interest rates unchanged at the record low level 0-0.1%
Japanese financial institutions are going to expand their purchases of Japanese T-bonds as well. The news made the Japanese Yen depreciate versus the US Dollar by 0.4% down to 77.96.
Some analysts are sure that the QE expansion won’t have a long-lasting positive effect.
A this point, USDJPY is in the process of retracing against the long-term trend of the JPY strengthening. According to the Department of Masterforex-V Trading System , the long-term bearish wave A(C ) or shortened C is nearly completed. If USDJPY breaks the MF pivot 77.95 and the bearish MF sloping channel, it will confirm the forming of A/B of a bigger wave level. A break below 76.01 will continue the downtrend of USDJPY (the strengthening of the Japanese Yen), thus forming sub-wave A(C )/C.
