- USD/JPY turns higher sharply on reports that BoJ will remove the bond-buying limit.
- The sharp intraday recovery quickly fizzled out ahead of the 108.10 supply zone.
- The set-up warrants some caution before placing any aggressive directional bets.
The USD/JPY pair once again showed some resilience near the 107.30 region and rallied around 70 pips in the last hour on reports that BoJ will remove the bond-buying limit.
Despite the sudden spike, the pair continued with its struggle to build on the momentum beyond the 108.00 mark and quickly retreated around 30 pips from the daily swing high.
The two-way price action remained confined well within a one-week-old trading range and clearly indicates indecision over the pair’s next leg of a directional move.
Moreover, mixed technical indicators on hourly/daily charts haven’t been supportive of any firm near-term direction and further warrant some caution for aggressive traders.
Hence, it will be prudent to wait for a sustained break through the mentioned 107.30-108.10 trading band before traders start positioning for the pair’s near-term trajectory.
A convincing break through the 108.00-108.10 supply zone will be seen as a key trigger for bullish traders and set the stage for a move towards reclaiming the 109.00 mark.
Alternatively, some follow-through weakness below the 107.35-30 supply zone might turn the pair vulnerable to aim towards testing sub-106.00 levels in the near-term.
USD/JPY 1-hourly chart
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Technical levles to watch
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