• USD/JPY fell to a seven-month low on Tuesday as the yen strengthened amid growing expectations that the Bank of Japan could accelerate the pace of policy tightening.
• Analysts said a combination of factors is driving a major shift in sentiment toward the Japanese yen, including growing expectations that the Bank of Japan could accelerate the pace of monetary tightening, while the potential for Japanese investors to repatriate overseas funds is raising demand for the currency.
•At the same time, the unwinding of carry trades, in which investors borrow yen to invest in higher-yielding assets abroad, is adding further upward pressure on the yen as traders reduce risk and close dollar positions.
• Japanese Finance Minister Satsuki Katayama said on Tuesday that Tokyo and Washington remain aligned in their approach to currency markets and will continue close communication to ensure orderly foreign exchange movements..
• The BOJ next meets for a policy decision on September 17 and 18, when markets nearly fully expect it to raise rates to 1.25% from 1% following a hike in June.
• Immediate resistance is located at 154.42 (Daily high), any close above will push the pair towards 155.55(38.2%fib).
• Support is seen at 152.62(23.6%fib) and break below could take the pair towards 152.00(Psychological level)
Recommendation: Good to sell around 153.40, with stop loss of 154.50 and target price of 152.50
