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Forex - USD/JPY up again after stimulus announcement

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Shutterstock photo - The Japanese yen was lower against essentially all of its major rivals during Friday's Asian after the Japanese Cabinet approved a new economic stimulus package aimed at jolting the world's third-largest economy out of its long slumber.

In Asian trading Friday, USD/JPY climbed 0.22% to 88.99. The pair was likely to find support at 87.61, the low of January 7 and ran through resistance at 88.40, the high of January 4 and a two-and-a-half year high.

Newly elected Japanese Prime Minister Shinzo Abe announced a new USD224 billion stimulus program that he said could add 600,000 new jobs to the Japanese economy.

In announcing the stimulus package, Abe, who also served as prime minister in 2006-2007, reiterated that the Bank of Japan should align its inflation target with his own. The Central Bank, which meets on January 21-22, currently has an inflation target of 1%, but traders are widely expecting BoJ to raise that target to 2% to match Abe's desires.

In other Japanese economic news, current account balance rose less-than-expected last month, official data showed on Thursday. In a report, Ministry of Finance said that Japan's Current Account rose to a seasonally adjusted 0.23T, from 0.41T in the preceding month. Analysts had expected Japan's Current Account to rise 0.31T last month.

Abe stimulus package includes USD216 billion in funds earmarked for the reconstruction of areas ravaged by the 2011 tsunami and earthquake that lead to significant loss of life and economic damage.

Elsewhere, EUR/JPY added 0.1% to 117.97 after the European Central Bank, as was widely expected, decided to leave interest rates unchanged. Some traders expected some hints from ECB President Mario Draghi that rate cuts could be on the docket later this year, but even though that language was nowhere to be found.

The pair sought to test support at 113.56, Tuesday's low, and broke throug resistance at 115.56, the high from Jan. 6. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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