USD/JPY moves sideways near 2-week highs ahead of BoJ

After rising 150 pips on the day, the USD/JPY pair turned positive on the week ahead of the BoJ’s interest rate decision and the monetary policy statement later in the Asian session. As of writing, the pair is trading at 110.92, up 1.2% on the day.

Today’s rise in the pair was fueled by the greenback strength as yesterday’s FOMC statement attracted the investors back to the USD, pushing the US Dollar Index to its weekly high at 97.55. Although the risk appetite faded away in the NA session with the major equity indexes in the U.S. recording losses, the JPY failed to find demand as a safe haven and the pair remained bid.

The BoJ is widely expected to keep its monetary policy steady as it concludes its two-day meeting. The bank’s yield curve control (YCC) strategy hadn’t had the desired impact on the economy so far, but Governor Kuroda is likely to stick with it until he ends his term in April 2018. 

Technical outlook

FXstreet analyst Valeria Bednarik suggests that the recovery above 110.50, a major Fibonacci level, favors additional gains ahead, moreover as the 4 hours chart shows that the price has also surpassed its 100 SMA in the mentioned chart, whilst technical indicators maintain their bullish tone well above their mid-lines. She adds that the next resistance comes at 111.30, the 50% retracement of the latest monthly bullish run, with a recovery beyond it exposing the 112.00 region.

According to the analyst, supports could be seen at 110.50, 110.10 and 109.70.

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