USD/JPY bulls looking to build on recovery beyond 200-DMA

   •  Risk recovery/dovish BoJ minutes weigh on JPY and helps build on overnight rebound.
   •  A follow-through pickup in the USD demand supportive of the mildly positive tone.

The USD/JPY pair held on to its modest daily gains, albeit now seemed struggling to build on the momentum further beyond the very important 200-day SMA.

The pair continued with its steady climb from overnight swing low level of 109.55, or over one-week lows, and got an additional boost from a goodish pickup in the US Dollar demand.

This coupled with a slight recovery in investors risk appetite, as depicted by a modest rebound in equity markets, weighed on the Japanese Yen's safe-haven appeal and further collaborated to a mildly positive tone surrounding the major. 

Meanwhile, the market had a rather muted reaction to the release of BoJ policy meeting minutes, which revealed that most policymakers wanted to keep monetary policy unchanged and some felt it appropriate to ditch the timeframe for achieving the inflation target. 

The outlook was further reinforced by the BoJ Deputy Governor Amamiya's comments, saying that the central bank will continue its ultra-loose monetary policy. 

Further up-move, however, remained limited and was being capped by flattening of the US Treasury yield curve, which might hinder any follow-through strong USD buying interest. 

In absence of any major market moving economic releases, traders will remain focus on central bankers' speeches at the ECB Forum on Central Banking, in Portugal, in order to grab some short-term trading opportunities.

Technical outlook

Yohay Elam, FXStreet's own Analyst writes: “The Technical Confluences Indicator shows that that the pair initially needs to conquer the battle over 110.22 which is a dense cluster of technical levels including the Simple Moving Average 200-15m, the SMA 200-1h, the Fibonacci 61.8% one-day, the SMA 50-4h, the SMA 10-one-day, and the Bolinger Band one-hour Upper-Stdv. 2.2.”

“The next challenge is very close, at 110.35, which is the convergence of the Fibonacci 38.2% one-week, the SMA 100-1h, and the Bolinger Band one-hour-Middle. Further above, the 110.96 level is the confluence of the one-week high, the Bolinger Band one-day, and the Bolinger Band one-hour Upper,” he further adds.