The yen is getting cheaper, but this is not the limit

The USDJPY pair successfully worked out the idea of buying after the correctional decrease in March. The scenario was repeated in April: a growth wave, a small pullback down, and then a renewal of multiyear highs again. And it looks like the USDJPY will continue its way up in the nearest future.

Even the most loyal supporters of the expansionary monetary policy are running out of reasons to support their position. In particularly, the ECB has already announced terms of the asset-buying programs ending, and among the European regulator representatives are talking about raising the key rate in the summer increasingly. But the Bank of Japan continues to stick to its guns: the interest rate is negative and assets are bought out of the market.

Hopes to hear some words of support for the Japanese currency did not meet the expectations again. At the meeting on April 28 the Bank of Japan held true to its position of active monetary stimulation of the economy. When yields of 10-year Japanese bonds reaches 0.25%, the mechanism of buying them in unlimited numbers in order to prevent a further increase in profitability is activated. And bond yields in other currencies are higher and higher, in U.S. ones they are already close to 3%.

The spread widening in bond yields continues to push the USDJPY up. After breaking through the 2015 maximum at 125.85, it opens the way to the 2002 peaks, above 135.

Next week there will be a Fed meeting, after which some pullback of the dollar down is possible. This pullback can be used for new investments. Another option: to buy at the current price and sell before the announcement of the U.S. regulator meeting results.

The following trading strategy options can be offered:

1) Buying USDJPY after the Fed meeting on May 4. On a pullback down, you can wait for the formation of reversal candlestick patterns, such as the hammer, in order to increase reliability. Take profit - 135. Stop loss - 1-2% down from the minimum of May 4, then Trailing stop.

2) Buying USDJPY at the current price. Take profit - 135, or sell before the announcement of the Fed meeting results on May 4 at 9:00 p.m. Moscow time. Stop loss - 1% down from the buying price, then Trailing stop.