USDJPY – limited upside despite US deal, speculations BoJ may scale back monetary stimulus
The dollar probed again above 111.00 handle on Tuesday, inflated by news that US policymakers reached a deal to temporarily end the shutdown of the government. In addition, BoJ stayed unchanged as expected in today’s policy meeting, with no signs of tightening in the short term, heard from governor Kuroda’s speech after the meeting. The central bank will maintain its easy stance as CPI remains weak and is ready to further ease and hold momentum for inflation rise towards projected 2% target. However, greenback’s recovery attempts on Monday / today were limited, keeping the downside vulnerable. Upticks through falling 10SMA (currently at 110.96) were so far unable to make sustained break higher, keeping near-term risk shifted lower for renewed attacks at key 110.15/00 supports (Fibo 61.8% of 107.31/114.73 rally / psychological support). Loss of initial supports at 110.49 (Monday / today’s low) would open way towards 110.15/00 pivots, break of which would trigger fresh bearish acceleration.. Conversely, close above 10SMA will be initial bullish signal for further recovery and will unmask key barriers at 111.48 (18 Jan recovery high) and 111.72 (200SMA).
Res: 111.17; 111.22; 111.48; 111.72 Sup: 110.74; 110.49; 110.15; 110.00