USD/JPY reverses a spike above 102.00, BOJ in focus

The US dollar failed to keep the bids once again, sending the USD/JPY pair back below 102 handle, while the Japanese stocks also trim gains as sentiment remains under mild pressure.

USD/JPY capped below 5-DMA at 102.10   

Even with the Japanese traders returning to markets after yesterday’s holiday, liquidity remains thin amid persisting cautious tone in the markets, as traders await BOJ’s policy outcome due tomorrow in the Asian morning. It’s widely expected that BOJ may dive deeper into the negative territory and also do away with its timeline to achieve 2% inflation.

The latest uptick in the major, above 102 handle, was largely on the back of fresh buying interest seen behind the Japanese stocks, which somewhat lifted the market sentiment for a brief time. At the time of writing, USD/JPY trades modestly flat to 101.79, having posted daily highs at 102.06 and day’s low at 101.79, while the Nikkei 22 now trades +0.11% higher versus +0.40%.

All eyes now remain on the BOJ and Fed policy verdict due tomorrow for fresh direction on the major. While the upcoming US housing data are likely to have virtually no impact on the USD/JPY pair.

USD/JPY Technical levels to watch

In terms of technicals , the immediate resistance is located at 102.25 (10-DMA). A break above the last, the major could test 102.50/58 (psychological levels/ 20-DMA). While 2to the downside, the immediate support is seen at 101.79 (daily low) and below that at 101.54/40 (Sept 12 & 13 low).