My focus pair for this week is the USD/JPY. Last week the JPY was weakened by the Bank of Japan on Friday morning, the BoJ announced that it has lowered the interest rate on the current account to minus 0.1% with effect from 16 February. Importantly, the BoJ pledged to lower the rate further into negative territory if judged necessary. The QQE program was left unchanged though following the December amendments.
USD/JPY’s strong rebound last week confirmed near term reversal with 116.00 demand zone intact on the monthly charts. Initial bias remains on the upside this week for 123.75 resistance. Buying the dip around 120.331 support doesn’t seem a bad idea. Price actions from 125.85 are viewed as a side-way consolidation pattern. There is not enough evidence to indicate a breakout yet. Thus, we’ll be cautious on strong resistance between 123.75 and 125.84 to bring near term reversal. On the downside, below 119.95 minor support will turn bias neutral first.