USD/JPY: bulls being tested in Tokyo, testing 104 handle

Currently, USD/JPY is trading at 104.13, up 0.18% on the day, having posted a daily high at 104.18 and low at 103.91.

USD/JPY has started to lose the bid to into the Tokyo session within the recent and narrowly range bound area around the 104 handle. The greenback has bounced back and Wall Street was lower. "The BoJ's Sakura Regional Economic Report hinted at JPY strengthening pressure and downgraded the Tokai region's economic assessment," noted analysts at Bank of Tokyo Mitsubishi.  

On a deeper analyses, fundamentally, the analysts also note how the USD/JPY has actually remained quite calm even after the start of JPY yield curve control operations by the BoJ. "All major JPY markets, USD/JPY, JPY yields and the Nikkei stock index have been calm with low volatility in the past two weeks. Next week JPY buying by exporters may rise further close to the end of month. Simultaneously, JPY selling by Japanese investors may support the lower bound of USD/JPY."

USD/JPY levels

Analysts at Commerzbank suggested that above 104.63 targets the May low at 105.55. "We suspect that this will hold the initial test as we note the weekly imoku 2 lies 105.45 (cloud resistance)."

Meanwhile, current price is 104.14, with resistance ahead at 104.18 (Daily High), 104.20 (Monthly High), 104.34 (Daily Classic R2), 104.71 (Daily Classic R3) and 104.93 (Weekly Classic R1). Next support to the downside can be found at 104.14 (Weekly High), 104.12 (Yesterday's High), 103.95 (Daily Open), 103.91 (Daily Low) and 103.89 (Daily Classic R1).