The yen pared losses after weakened sharply at the end of last week, when investors’ focus is at the Bank of Japan’s monetary policy meeting. The BOJ is expected to ease its monetary policy further in order to stop yen’s strengthening.
Meanwhile, the dollar weakened. The market is skeptical that the Fed will raise its interest rate in a meeting which will start this Wednesday as global market remains weak.
The yen weakened as much as 2,1 percent last Friday, which was the biggest since BOJ’s governor Haruhiko Kuroda announced the second round monetary easing last October. The trigger was a report from Bloomberg said that BOJ is considering negative rate for credit program for financial institutions.
USD/JPY currently is in correction phase, approaching the Fibonacci support area at 110.860-110.245. Note that hourly CCI is oversold but stochastic currently is in neutral stance. As today’s trading strategy, watch for bullish signal confirmation on a pull-back move to within the Fib’s support area to go long with 111.240 as target and 11.855 in extension.
Be careful if the price managed to break the support at 110.245 because it will turn the intraday bias to bearish and possibly will be followed by a bearish move to 109.807-109.250.