USD/JPY: A phase of bearish consolidation ahead of BOJ

The JPY bulls take a breather after the recent upsurge, allowing USD/JPY to consolidate the extensive slide witnessed a day before. The spot was last seen exchanging hands at 113.70, having posted a day’s low at 113.58 and day’s high at 113.84, and losing -0.07% on the day.

The major remains on the offers for the second straight session, mainly driven by the Trump’s protectionism policies induced risk-aversion wave, which boosted the safe-haven yen at the expense of the buck.

Moreover, expectations of an upgradation to the Japanese inflation and growth outlook at the BOJ monetary review meeting concluding today, also provided extra legs to the latest JPY rally. BoJ preview: significant risks ahead for USD/JPY?

Analysts at Scotiabank noted, “"Sentiment is dominant, with JPY largely ignoring the release of softer than expected retail sales data. Near-term risk lies with the BoJ policy decision following Monday’s NA close, and market participants are likely to focus on the statement tone and any fresh commentary on the ‘yield curve control’ policy announced in September."

USD/JPY Technical levels to watch 

The major finds immediate resistance at 114 (10-DMA). A break above the last, the major could test 114.35 (5 & 20-DMA) and 114.81 (daily R1) beyond the last. While to the downside, the immediate support is seen at 113.46 (previous low) next at 113.02/01 (Jan 26 & 25 low) and below that at 112.66 (Jan 23 low).