USD/JPY: Bearish gap filled, re-takes 105 ahead of BOJ, Fed

The USD/JPY pair recovered the bearish opening gap and now resumes its recent uptrend as the US dollar regains poise versus its main peers heading into a crucial central bank’s decision dominated week.

USD/JPY finds support near Friday’s low

The dollar-yen pair staged a solid comeback from the opening bearish gap witnessed on the back of resurgence of demand for the yen, after risk-off gripped the markets on news of re-opening of FBI probe on Clinton’s emails.

Moreover, divergent monetary policy outlooks between the Fed and BOJ become more prominent  at the start of the central banks’ week ahead, and hence, keeping the sentiment underpinned around the greenback. The major is last seen exchanging hands at 104.88, up 0.15% on the day.

Further, poor set of Japanese economic data also weighs on the yen, aiding the recovery in USD/JPY towards 105 handle. Japan: Sept preliminary industrial production stood at 0.0% m/m versus 0.9% expected. While Japan’s retail sales also missed estimates for the month of September.

The immediate focus now shifts towards a fresh batch of US economic releases due later on the day ahead of the BOJ policy decision due tomorrow.

USD/JPY Technical levels to watch 

In terms of technicals , the immediate resistance is located at 104.94 (daily high & R3). A break above the last, the major could test 105.50 (psychological levels) and 105.89 (Jul 26 high) beyond the last. While to the downside, the immediate support is seen at 104.78 (5-DMA) next at 104.40 (10-DMA) and below that at 104.07 (20-DMA).