USD/JPY catches bid wave, moves above 105.00

Bid tone around USD picked up in pace, helping USD/JPY move back above 105.00 levels although there is no clear catalyst for the recovery off lows.

Focus on BOJ

The focus is on tomorrow’s Bank of Japan (BOJ) rate decision due tomorrow. A day ahead of the event, Japanese economy minister has urged BOJ to help support growth. Anyway markets expect the central bank to cut rates and expand its QQE program tomorrow.

Overnight, the Fed was slightly hawkish but the drop in the USD suggests markets were clearly positioned for a more hawkish view – a clear hint at September hike. Consequently, USD/JPY dropped to a low of 104.64 in Asia before recovering to just above 105.00 levels.

USD/JPY Technical Levels

The pair was last seen trading around 105.10 levels. A break above 105.17 (23.6% of 125.856-98.787) would expose 105.68 (50-DMA) – 106.00 (zero figure). On the other hand, a breakdown of support at 105.00 could yield re-test of daily low of 104.64 under which losses could be extended to 103.99 (Tuesday’s low).