BUZZ-COMMENT-USD/JPY is down, but not out, ahead of the BOJ decision
Jan 16 (Reuters) - USD/JPY has come under considerable pressure in the run up to the Bank of Japan rate decision, but there is technical support that continues under spot for now.
The yen climbed against the dollar after softer-than-expected U.S. inflation data and it extended gains in Asia, as raised chances of Federal Reserve rate cuts coincided with murmurs of a BOJ hike next week.
BOJ will debate whether to raise interest rates next week, Governor Kazuo Ueda said on Wednesday, signalling its intention to take borrowing costs higher barring a Trump-driven market shock.
USD/JPY's drop from 156.52 to 155.21 on Thursday, found support ahead of the 154.97 Fibo, a 38.2% retrace of the 148.65 to 158.88 (Dec to Jan) EBS rise. Regardless of BOJ's looming rate decision, the huge gap in rates between the two central banks should keep USD/JPY's overall bias on the upside.
The 154.97 Fibo is a key barometer for spot's direction. Traders should beware that only a break and daily close below this technical level would be a sign the dollar's yield advantage over the yen is being ignored.
For more click on FXBUZ
(Martin Miller is a Reuters market analyst. The views expressed are his own)
((martin.miller@thomsonreuters.com))
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