This week, the USD/JPY slid from a high of 102.64 to 101.60 on Thursday. Ahead of the BoJ’s monetary policy meeting, traders bought USD/JPY back to 102, a price level which is becoming sticky – you saw price consolidate around 102 during the 6/11 session.
The Bank of Japan voted unanimously to keep the current pace of stimulus, and to boost the monetary base by 60-70 trillion yen annually. The bank did mention improved economic conditions both domestically and abroad, but maintained that the current monetary policy is appropriate until it get get inflation to the 2% target.
After the bank policy announcement, traders faded USD/JPY from 102, but kept it above the 101.60 low and traded it back up to 102 by the time the 6/13 US session started.
Price is still sticky around 102, but there is a near-term bullish bias based on the price action before and after the the BoJ announcement.
However, the near-term rally has some resistance to deal with or it is within the context of a bearish development. The 4H chart below shows 3 falling trendlines that reflect a bearish development. The current rally is testing the first one. A break above 102.15 should clear this trendline as well as a previous high, and thus signal the bullish outlook toward 102.79 – 103. However, more clues will be needed such as ability to hold above the sticky 102 level, and ability to extend above the second and third falling resistance lines (seen in the 4H chart)
However, if price ends up falling below 102 to end the week, the bearish momentum from this week will be maintained (the 1H RSI would hold below 60, which reflects bearish momentum).
The 4H chart shows that the market has been sliding from the 102.79 high from last week. The Failure to break above 102.15 and a fall below 102 keeps the 101.42 then 100.82 support pivots in sight.
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