USD/JPY: all eyes on the BoJ exposing yen to downside towards 103.36 target

The BoJ are very much in play this month and are taking the spotlight in the markets, concerning investors that they have run out of ammunition and have only the negative interest rate card left to play.

USD/JPY has been chasing back losses over the last few sessions, recovering from 101.20 after bulls lost the battle with the bears through the 104 handle at highs of 104.30 at the start of this month. 

The VIX jumped this week, breaking the 18 handle overnight and the DXY performed on the bid again, taking the Yen with it along with market sentiment that the BoJ will be considering the negative interest theme as a very viable option considering the lack of bond market liquidity.

However, there will have to be a great deal of consideration on this considering the possible negative impacts on the public and it has been an unpopular policy to date, not just with the country's banking sector and public, but the wider global financial system as a whole.

"It's not as though we can keep lowering rates forever," a BOJ official said.

The big bluff in the era of Central Bank monetary socialism

USD/JPY levels

Current price is 102.82, with resistance ahead at 102.86 (Daily High), 103.15 (Daily Classic R2), 103.62 (Daily Classic R3), 104.02 (Monthly High) and 104.14 (Weekly Classic R1).
Next support to the downside can be found at 102.75 (Yesterday's High), 102.67 (Weekly High), 102.67 (Weekly Classic PP), 102.57 (Hourly 200 SMA) and 102.56 (Daily Open). Looking at price patterns, we can see a Piercing Line and Engulfing Bullish 4-hour candlestick formation. 

On a break of the 103 handle, USD/JPY once again targets the four month resistance line at 103.63, as suggested by analysts at Commerzbank. "As long as the four month support line at 99.83 and the July and August lows at 99.99/55 hold, the May low at 105.55 will remain in focus. Still further up the early April low and July peak can be seen at 107.49/63."