The USD/JPY pair remained confined within a 40-50 pips trading range, below 105.00 mark, and is currently trading around 104.75-80 band as markets now eagerly await for BOJ monetary policy decision during Asian trading session on Friday.
The Bank of Japan monetary policy statement will be followed by release of central bank's outlook on economic conditions and inflation. Market participants will also be keen to scrutinize BOJ Governor Haruhiko Kuroda's comments at a subsequent press conference.
Market participants still remained divided over the prospects and size of additional monetary stimulus, if any. However, given the recent announcement by Japan's PM Abe about introducing fresh stimulus measures, the pair seems to price-in at least some measures to be announced by BOJ.
Hence, traders seem to position themselves cautious as any disappointment would trigger a fresh bout of volatility for the USD/JPY pair.
From the US, focus would remain on Friday's second quarter advanced GDP release, which would determine the prospects of an eventual Fed rate-hike action during 2016 and would drive the greenback in the near-future.
Trade the US Gross Domestic Product - July 29 GDP Live Coverage
Technical outlook
Valeria Bednarik, Chief Analyst at FXStreet, notes, "the 1 hour chart presents a limited upward potential, as the price is currently developing below its 100 and 200 SMAs, with the shortest providing a strong dynamic resistance around 105.40. In the same chart, the technical indicators head higher within negative territory, still far below their mid-lines, not enough to confirm further gains. In the 4 hours chart, the price has once again bounced from a bullish 100 SMA, the Momentum indicator heads higher above the 100 level, but the RSI remains around 41, with limited upward strength, and in line with further consolidation ahead."
"Support levels: 104.60 104.20 103.70
Resistance levels: 105.05 105.40 105.80"
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