The Japanese Yen (JPY) struggles to capitalize on its modest intraday gains against the US Dollar (USD) on Monday, remaining well within striking distance of its lowest level since November 28 reached last week. Investors are skeptical that the Bank of Japan (BoJ) will signal any intention to end negative interest rates or adjust the Yield Curve Control (YCC) policy at the conclusion of its two-day meeting on Tuesday. This sentiment, coupled with an overall positive tone in equity markets, weakens the safe-haven appeal of the JPY.
Despite this, the US Dollar (USD) receives a tailwind as odds for an early interest rate cut by the Federal Reserve (Fed) diminish, prompting the USD/JPY pair to attract dip-buying near the 147.75-147.70 area. Ongoing concerns about slowing economic growth in China and the potential escalation of geopolitical tensions in the Middle East may temper optimistic market moves, limiting significant downside for the JPY leading up to the eagerly awaited BoJ decision.
Technical Analysis: USD/JPY Finds Support and Faces Resistance
From a technical perspective, potential downward movements are likely to encounter robust support near the 100-day Simple Moving Average (SMA), currently positioned around the mid-147.00s. A decisive break below this level could trigger aggressive technical selling, pushing the USD/JPY pair towards the 147.00 mark, with the next pertinent support situated in the 146.60-146.55 area.
Conversely, immediate obstacles for the pair include the 148.00 round figure, followed by the 148.15-20 region, acting as a barrier before the multi-week high around the 148.80 zone touched on Friday. Further buying momentum, resulting in strength beyond the 149.00 mark, may serve as a fresh catalyst for bullish traders. In such a scenario, the USD/JPY pair could target the 150.00 psychological level, encountering intermediate resistance near the 149.70-149.75 area.