USD/JPY traded at 111.90, a fresh high ahead of BoJ

USD/JPY rose from 111.30 to 111.80 overnight but has just inched a touch higher as investors get set for the BoJ today which meets in a tough situation whereby its policy tools are not having the desired effect and as we heard yesterday, whereby the Japanese government talks of a potential downgrade to its assessment of the economy, the BoJ will also note that domestic economic conditions are softening. 

When is the BOJ rate decision and how could it affect USD/JPY?

"Growth is slowing, the inflation goal is looking even less attainable and the current easing framework of Yield Cure Control is ineffective," Tom Kenny, Senior Economist at ANZ Bank explained. 

"Although we don’t anticipate any policy change from the central bank this week, we think it must be getting close to a tipping point in terms of considering easing policy more, rejigging its easing framework or rethinking its inflation goal." 

In other politics, the US-China trade deal continues to be elusive. Reports overnight from  Bloomberg News explained that the Trump-Xi meeting is unlikely to take place until April. 

Meanwhile, the US 10yr treasury continues to drift sideways, between 2.61% and 2.64% and the futures markets are factoring in an increasing chance, now to 20%, that the Fed will have cut by December - weighing on the greenback that struggles towards 98 in the DXY. 

USD/JPY levels

Valeria Bednarik, Chief Analyst at FXStreet explained that the 4 hours chart shows that the pair spent most of the last session consolidating above its 100 and 200 SMA, both presenting modest upward slopes:

"In the same chart, technical indicators have stabilized near their highs, in positive ground. The pair has room to extend its gains up to the 112.45 region on a break above 112.13, so far the yearly high."

• Support levels: 111.10 110.85 110.50
• Resistance levels: 111.90 112.15 112.45