FXStreet (Mumbai) – The JPY rally loses steam heading into the mid-European trades as the yen bulls take a breather, sending USD/JPY back near 120.40 region, where it started this session.
USD/JPY rises from 120.12
Currently, the USD/JPY pair trades -0.09% lower at 120.36, retreating from fresh session lows of 120.12 reached in last hours. The USD/JPY pair was caught by a fresh bid-wave at the hourly 50-SMA support and trimmed losses, as the focus now shifts towards Wednesday’s Bank of Japan (BOJ) monetary policy meeting.
The yen shed most gains versus the US dollar as markets widely expected a fresh round of easing to be announced by the BOJ tomorrow. Goldman economists noted, “We maintain our base-case for the BOJ to take additional easing action on October 30, although we do not fully rule out the possibility of an earlier move this week.”
Further, improving risk appetite after the major European indices turned positive also dulled the safe-haven appeal of the yen, thus aiding the recovery in USD/JPY. Looking ahead, the major will be influenced by the upcoming US trade data, which is expected to show a widening trade deficit in August.
USD/JPY Technical levels to consider
To the upside, the next resistance is located at 120.56-57 (Oct 5 and Today’s High) levels and above which it could extend 121.02 (Sept 17 High), above which the 200-DMA located at 121.38 holds key. To the downside immediate support might be located at hourly 50-SMA. A break below the last, the pair could drop to 200-SMA at 120.06 and further to 119.22 (Sept 29 Low) levels.
(Market News Provided by FXstreet)