USD/JPY Current price: 120.95

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Buying the dips. The USD/JPY pair retreated from the highs set late last week at 121.47, weighed by comments made by PM Abe's adviser Hamada. He said that there's no need for the BOJ to ease, as long as market expectations for a FED rate hike keep the yen weak. Investors have been pricing in additional stimulus in Japan given that inflation remains subdue, and the news forced some profit taking, albeit the pair remains near its recent highs ahead of the Central Bank meeting. Also, the pair has been steadily rising for the past two weeks, and the movement can be considered corrective, with a critical support at 120.35, as the downside will remain well limited as long as the price remains above it. The short term picture is bearish, as despite the price is well above its moving averages, the technical indicators head lower below their mid-lines in the 1 hour chart. An early dip has met buying interest around 120.77, so a break below it can lead to a test of the mentioned 120.35. In the 4 hours chart, the technical indicators are retreating partially from extreme oversold territory, but are far from suggesting a deeper downward movement at the time being.

Support levels: 121.75 121.35 121.00

Resistance levels: 121.05 121.40 121.85

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