The Yen weakening drive the USD/JPY to become the currency pair that has the most significant increase. That happened amidst the mixed market situation ahead the monetary policy announcement by The Fed. 

Based on the plan, that information will be announced this week. That follows the announcement from the Bank of Japan which is unable to move from the loose monetary. 

When this news was written on Tuesday night, the USD/JPY jumped for 0.52% to 108.63. That was the highest level since 19 of April. Until now,  Japan is still difficult to reach the inflation target of 2%.

BoJ Will Not Change Its Policy

Yesterday morning, the Bank of Japan or BoJ decided for not changing its loose monetary policy. It is because the Japanese economic outlook is higher. The cause the third wave of COVID-19 infection there. 

Inflation is becoming a huge obstacle for Japan again. The outlook of Inflation is cut related to the decreasing cost of data usage by the giant cellular operators in that country. 

It follows the advice from the government because there are so many jobs to do via online during this pandemic. Japanese international inflation ensures BoJ for not moving from its policy. 

That is the loose one. The main CPI is not counting the volatile goods price such as foods and fuels. Those are projected to increase by 1.0% in 2023 as the fiscal year. 

Coronavirus Makes Everything is Harder

The condition above shows that the coronavirus pandemic makes everything is harder in Japan, especially to reach the inflation target of 2%. The uncertainty aspect is still really high.

However, the Japanese economic growth outlook is still optimistic. Many experts predicted that it can grow for 4.0% this year until March next week. That projection is higher than the estimation before. 

Before, the estimation was in 3.9%. The Japanese economic still has the upward trend although it is still in the bad situation because of the COVID-19 impact, domestically or globally. 

Japanese economy is still supported by the economic recovery in several countries as their partners. Those are like China and America. However, the domestic demand is still weak right now. 

USD is Also Weak

The US dollar is also weakening. It is especially to most of the major currencies in the early sales two days ago. When this news released, the index of Dollar or dxy was sold around 90.73.

That decreased by 0.11 percent from the daily open price. The dollar weakening yesterday morning continued its bearish trend which has been formed since last week. Meanwhile, EUR/USD is stronger. 

That pair was sold at the level of 1.2110. Elsewhere, the USD/JPY was weakening by 0.15% around 107.73. The dollar commodities are also taking the advantages from that momentum. 

Those dollar commodities are AUD, NZD, and CAD. Those commodities was increasing significantly yesterday. These situations may be continued in the future based on certain conditions. 

The Fed Tapering Rumor is Faded

The investors attention is now in the Fed announcement. The possibility is the dovish tendency that will be continued. The market participants don’t anticipate the tapering signal so much. 

Vice versa, Jerome Powell maybe will state again about the commitment of the US central bank to maintain its low interest rate until some years later. Furthermore, he has been stated for many times. 

He said that the American economy will still face the long and difficult road to reach a recovery based on the target from the Fed. The dollar weakening will be continued in some weeks ahead. 

The experts predicted that the Fed meeting this week will not become an event for Dollar to increase. It is because the USA economic still needs the substantial evidence before The Fed reduce the asset purchase.