USD/JPY is still having a pause in the general long-term uptrend. In the past week the Bank of Japan didn’t increase monetary stimulus, and this provided some support to the Japanese currency: the bears tried to pulls USD/JPY down. Meanwhile, the European Central Bank’s quantitative easing improves the market’s risk sentiment decreasing the negative pressure on USD/JPY.
The ability of USD/JPY to overcome the 120 yen mark and fix above it will depend on the Fed’s meeting results on Wednesday. As other central banks from Europe to Canada do monetary easing, the Fed may become more cautious and deliver mild, dovish comments. In this case negative pressure on USD/JPY will strengthen and we’ll see a decline to 115.85. If the Fed remains hawkish, however, the bulls will attack 120.00.
As for the data from Japan, don’t miss the BOJ meeting minutes early on Monday and inflation data on Friday.