FxWirePro: USD/JPY inches lower, set to stay on back foot

 • The USD/JPY dipped on Tuesday as    yen firmed for the second day in the wake of Prime Minister Sanae Takaichi's election victory.

  • The rising expectation that the landslide win could allow Takaichi's government to be more fiscally responsible because it eliminates the need for negotiations with opposition parties has also helped the yen and soothed investor jitters.

  • The spotlight has now shifted to what Japan does with its massive foreign currency reserves , a $1.4 trillion war chest for future yen interventions.

  •  Finance Minister Satsuki Katayama has said using a surplus from the reserves could be considered when discussing funding sources for planned cuts to the sales tax on food.

•  The Japanese yen  strengthened to 155.24 per U.S. dollar after rising 0.8% on Monday.

• Immediate resistance is located at 156.29(SMA 20), any close above will push the pair towards 156.37 (38.2%fib).

•  Support is seen at 154.63(50%fib) and break below could take the pair towards 154.00 (Psychological level)

Recommendation: Good to sell around 155.60, with stop loss of 156.70 and target price of 155.00