After rallying for five days in a row, the greenback moved lower against the Japanese yen on Wednesday, taking the price to less than 120.30 ahead of US unemployment data and BOJ monetary policy meeting minutes.

Technical Analysis

As of this writing, the pair is being traded around 120.39, the level that already has been breached yesterday. The pair opened the Asian session at 120.68 and rose higher getting ready to challenge the December high. Being restricted by the barrier around 120.75, the pair is still struggling against it to pave its way towards 121.00 and then the December high that lies around 121.84. Success in breaching this level will enable the pair to test the 7-year high around 123.54 and then 125.00 and thus printing a record high for the current year.

On the downside, an immediate support can be noted around 119.47, ahead of 117.89, the 23.6% Fib level of the last drop from 105.19 low to 121.84 high. Breaching this support level will allow the pair to test the next major support level that lies around 115.47, the confluence of 38.2% fib level, trend line and 50-Day SMA as demonstrated in the following chart.

The long-term bias however is bullish because of higher lows on the daily chart. The bias is expected to remain bullish as far as the support area 105.19 is intact.

Initial Jobless Claims

The US initial jobless claims for this December are scheduled for release today by the US Department of Labor. Generally speaking a high number indicates shrinking economy and is thus considered bearish for the USD dollar. Thus the larger than previous month figure (289K) will induce selling pressure in the price of USD/JPY.

BOJ Monetary Policy Minutes

The BOJ monetary policy minutes are due today later in the New York session. Depending on the sentiment of the report, the Japanese yen may show some volatility. Generally speaking, a hawkish sentiment exerts bullish pressure on Japanese yen, while a dovish tone exerts bearish pressure.

Trade Idea

Considering the overall technical and fundamental analysis, staying at sidelines is recommended ahead of economic releases. Selling the pair is preferred only if the price leaves a bearish pin bar or bearish engulfing candle on the daily chart.

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