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  • BOJ rate hike talk has failed to put a bid under the Japanese Yen.
  • USD/JPY is flashing green and aiming for 111.00.

Currently, the USD/JPY is trading at 110.83, having clocked a session high of 110.93 earlier today.

The JPY doesn’t find any takers despite MNI reporting earlier today that the Bank of Japan (BOJ) is likely setting the stage for an interest rate hike before reaching its 2 percent inflation target. As per MNI, the BOJ quietly made its intentions clear in an obscure paragraph on page two of its policy statement issued last month.

However, JPY’s failure to pick up a bid indicates the investors are not buying the hawkish talk. Moreover, there is a consensus in the market that BOJ is unlikely to raise rates anytime soon and if anything, the central bank’s decision to allow long-term yields to move freely has only made the ultra-accommodative monetary policy more sustainable in the long-run.

The currency pair may challenge previous day’s high of 111.43 if the US housing data and jobless claims paint a positive picture of the US economy.

Technically speaking, a daily close above 111.43 would put the bulls back in a commanding position. On the other hand, a close below 110.43 would validate yesterday’s bearish outside-day candle and open the doors to levels below 110.00.

Daily chart

Resistance

R1: 1111.03 (10-day moving average)

R2: 111.43 (previous day’s high)

R3: 112.15 (Aug. 1 high)

Support

S1: 110.43 (previous day’s low)

S2: 110.11 (Aug. 13 low)

S3: 109.90 (200-day moving average)