Yen bulls charged up on dovish Yellen

Yen strengthened to strongest level against Dollar, since third quarter of 2014, at a time, when Bank of Japan (BOJ) introduced additional asset purchase and increased the pace of purchase to ¥80 trillion per annum. Now that upward course seem to have reversed as Yen has so far gained more than 1200 pips from its peak last year.

What has been more concerning is Bank of Japan's (BOJ) new stimulus measure, negative rates just failed to push Yen lower. If monetary policy becomes, less effective in driving exchange rates, central banks could lose control over its policy reactions and may have to just sit tight and watch the rampage.

It is not right to bash Mr. Kuroda completely. As weaker Dollar is playing a part here.

Last night Fed chair Janet Yellen, in her testimony to congress sounded more cautious than her speech in December, when FOMC chose to hike rates back in December. Her speech indicates, that she is with the view that FED would have to be more cautious while raising rates further, meaning no hikes in March. According to her current conditions if persist could weigh on the outlook of US economy and labour market. She however doesn't see FED reversing its December hike, however it would be data dependent.

Yen is currently trading at 112.7 per Dollar.

FxWirePro targets 114 and 113.1 is reached. Next in line are 111.2, 108.5 and 98.5 areas.