• USD/JPY advanced on Tuesday as traders bet that the Bank of Japan would struggle to match the hawkish policy shift seen at other major central banks.
• The yen has stayed under pressure, aside from a temporary bounce after the rate check report, following Friday's Bank of Japan rate hike that was accompanied by two dovish dissenting votes.
• The move stood in contrast to the Fed's rate hike last week and the hawkish signals from most other major central banks, with investors expecting additional rate increases before year-end.
• Markets are pricing in about a 30% chance that the Bank of Japan will raise its benchmark short-term rate to 1.5% in October, while assigning roughly a 55% probability to a 25-basis-point Fed hike to a 4%-4.25% target range.
• Immediate resistance is located at 158.26 (38.2%fib), any close above will push the pair towards 160.00(Psychological level).
• Support is seen at 156.65(SMA20) and break below could take the pair towards 155.84(61.8%fib)
Recommendation: Good to buy around 156.60, with stop loss of 156.00 and target price of 158.50
