USD/JPY analysis: stuck at 111.00 ahead of central banks' meetings

USD/JPY Current price: 111.00

• The BOJ and the Fed will have their monetary policy meetings this week.
• Japanese policymakers expected to reshuffle their ultra-loose monetary policy.

The USD/JPY pair fell for a second consecutive week, to finish this last at 111.00. Rumors indicating that the BOJ, which will have its monetary policy meeting next Tuesday, is thinking of changing its ultra-loose monetary stimulus program, had backed yen gains these last few days. Adding to the USD/JPY decline were US Treasury yields that slipped Friday after US GDP data met market's expectations. The yield on the 10-year Treasury note ended the week at 2.94%. These upcoming week, not only the BOJ will have its monetary policy meeting, but also the Fed. This last is expected to reaffirm four rate hikes this year, despite Trump's criticism on the central bank's hawkish stance. If the BOJ disappoints by maintaining its policy unchanged and the Fed remains hawkish, a strong reversal could be expected by mid-week. The pair bottomed this past week at 110.58, and spent most of it below 111.40, the 61.8% retracement of the July's rally, a line in the sand as bears will maintain control as long as the pair remains below the level. In the daily chart, it continues developing well above its 100 and 200 DMA, with the shorter crossing above the larger around 109.75, although technical indicators entered negative territory with strong downward slopes, favoring another slide ahead. Shorter term, and according to the 4 hours chart, the pair is neutral, as it closed right around its 200 SMA and below the 100 SMA, both with mild upward slopes, as technical indicators hold directionless around their mid-lines.

Support levels: 110.55 110.20 109.75

Resistance levels: 111.40 111.85 112.20

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