USD/JPY comes down to test 5-DMA

Having spiked to levels seen pre-Brexit, the USD/JPY pair is now seen easing-off daily tops as the yen demand picks-up pace as markets digest upbeat Japanese trade figures and monthly economic report.

USD/JPY: BOJ to ease this week?

The dollar-yen pair witnessed fresh selling post-China open, as the JPY bulls cheered better –than expected Japanese trade data, while the Japanese monthly economic report showed that the economy is on a moderate recovery path, which further added to the retreat in the USD/JPY pair.

Moreover, with the Japanese stocks moving-off highs, risk sentiment appears to come under mild pressure and thus, boosts the safe-haven bids for the yen. At the time of writing, the USD/JPY pair recedes to 106.47, still up +0.32% so far this session, while the Nikkei 225 index trades +0.38% at 16,690 points.

Focus now shifts towards the BOJ and Fed policy decisions due later this week, with wide expectations that the BOJ will ease this week. While the Fed is expected to provide some clues on Sept rate hike, especially in wake of upbeat macro news seen last week.

USD/JPY Technical levels to watch

In terms of technicals , the immediate resistance is located at 106.72 (daily high). A break above the last, the major could test 107.29 (100-DMA). While to the downside, the immediate support is seen at 106.30 (5-DMA) and below that at 106 (round figure).