The US Dollar (USD) extended downside movement against the Japanese Yen (JPY) on Monday, dragging the price of USDJPY to less than even 120.50 ahead of some key economic events. The technical bias remains bearish due to a Lower High and Lower Low in the recent wave.
As of this writing, the pair is being traded around 120.44. A hurdle may be noted near 120.94-121.00, the confluence of 50% fib level and psychological number ahead of 121.31, the high of last week as demonstrated in the following daily chart.
On the downside, the pair is likely to find a support around 119.97, the 38.2% fib level ahead of 118.57, the swing low of the last major downside move. The technical bias will remain bearish as long as the 121.62 resistance area is intact which is the high of the last major upside rally.
Japan Interest Rate Announcement
On Tuesday, the Bank of Japan (BoJ) is due to release its monetary policy which will have major impact on the price of USDJPY. The Bank of Japan kept its monetary policy unchanged during its meeting in August, maintaining the massive stimulus program in belief it will accelerate inflation toward the 2% target. Kuroda noted that the weak dollar is positive for exports but at the same time hurts households and small firms due to rising import costs. Consumer sentiment continues to improve and household spending remains strong.
Considering the overall technical and fundamental outlook, selling the pair around current levels could be a good strategy as soon as the 121.31 resistance area is intact as discussed above.