The Japanese yen continued to decline after the publication of the monthly government report which stated that in the near future there may be a decline in private consumption and housing construction due to increased sales tax in April from 5% to 8%.
Negative for the Japanese currency was a decline in consumer confidence to its lowest level in the last 2.5 years. Thus, the ratio fell to 37.5 in March that is 1.0 worse than in February. In addition, the tertiary index of business activity in the service sector in February decreased by 1.0%, against the forecast of a 0.2% rise.
At the moment, investors are closely watching the possibility of imposing additional measures to stimulate the economy and inflation to the target level of 2.0%. Some experts have suggested to start the program similar to quantitative easing in the U.S.
We recommend holding long positions in USD/JPY with targets at 102.70 and 104.00 and keep medium and long-term positive outlook for the pair.