USD/JPY: All eyes on BOJ to extend run-up past-107.00


  • USD/JPY refreshes the intraday high following a U-turn from 107.15.
  • Increasing hopes of virus vaccine follow Wall Street's performance to recall the bulls.
  • News that Tokyo will raise the pandemic to the highest levels, fears of an escalation in the US-China tussle challenge sentiment.
  • BOJ will be the key despite no change expected in the monetary policy.

USD/JPY seesaws around the intraday high if 107.30 amid the initial hour of Tokyo open on Wednesday. The yen pair gained bids as market sentiment cheers upbeat earnings from major US banks and further news suggesting the coronavirus (COVID-19) vaccine is nearby. However, the bulls remain cautious ahead of the key monetary policy meeting of the Bank of Japan (BOJ).

Cautious optimism eyes BOJ…

With the upbeat earnings from JP Morgan and Citi, Wall Street took a sigh of relief after Monday’s weakness. Dow Jones gained 2.13% to 26,642.59 whereas S&P 500 and Nasdaq also added near 1.0% profits by the end of Tuesday’s trading. To extend the optimism, updates from Moderna and US President Donald Trump, signaling proximity to the vaccine, played their role.

However, news that Tokyo will escalate alerts to the highest of four levels on Wednesday caps the risk-on mood. While conveying the  data, Reuters said, “daily coronavirus cases exceeded 200 in four of the last six days, touching an all-time high of 243 cases last Friday as testing among workers in the metropolis’s red-light districts turned up infections among young people in their 20s and 30s.” Additionally, US President Donald Trump’s threat to have more actions for China, followed by Global Times’ comments defying the warnings, offer an extra burden on the risk-takers.

While portraying the market sentiment, the US 10-year Treasury yields and stocks in Asia-Pacific remain bid.

Looking forward, the BOJ remains as the key event for pair traders even if the policymakers are neither anticipated to alter the current benchmark rate nor the bond purchase program. The reason is the presence of a quarterly economic forecast. Bears are looking for downbeat expectations to break 107.00.

Read: BOJ Preview: No changes in policy, but forecast downgrades expected

Other than the BOJ, risk catalysts will also be the key as the latest optimism has many barriers to convince bulls for a long time.

Technical analysis

A daily closing beyond 50-day SMA, currently near 107.50, becomes necessary for the bulls to recall the above-108.00 area.

Additional important levels

Overview
Today last price 107.27
Today Daily Change 0.04
Today Daily Change % 0.04%
Today daily open 107.23
 
Trends
Daily SMA20 107.23
Daily SMA50 107.44
Daily SMA100 107.62
Daily SMA200 108.4
 
Levels
Previous Daily High 107.44
Previous Daily Low 107.12
Previous Weekly High 107.79
Previous Weekly Low 106.64
Previous Monthly High 109.85
Previous Monthly Low 106.08
Daily Fibonacci 38.2% 107.24
Daily Fibonacci 61.8% 107.32
Daily Pivot Point S1 107.09
Daily Pivot Point S2 106.95
Daily Pivot Point S3 106.77
Daily Pivot Point R1 107.41
Daily Pivot Point R2 107.58
Daily Pivot Point R3 107.73

 

 

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