- USD/JPY slumps in a knee-jerk reaction as BoJ stays pat, hits session lows at 110.56.
- BOJ announced no changes to its monetary policy settings, held rates while maintaining 10yr JGB yield target at 0.00%.
- The central bank will also release its quarterly economic report. Markets also await Governor Kuroda's presser scheduled at 06:30 GMT.
- The pair pared losses and closed higher on Monday after US government shut down was reverted with a 3-week funding bill.
- The major broke above the 111 handle to hit session high at 111.22 before closing at 110.92 levels.
- 110.50 offered strong support, with price action failing with multiple tests at 110.50 on the hourly time frames.
- Price action continues in downward sloping channel. 200-DMA is major resistance on the upside.
- We see bullish resumption only on breakout at 200-DMA, scope then for test of channel top at 113 levels.
- On the flipside, break below 110.50 could see test of channel base at 109.90. Breach of channel base could see major downside.
Support levels - 110.50, 110.15 (61.8% Fib retrace of 107.318 to 114.737 rally), 109.90 (channel base)
Resistance levels - 111 (5-DMA), 111.48 (Jan 18 high), 111.90 (38.2% Fib)
Recommendation: Wait for clear directional bias.
FxWirePro Currency Strength Index: FxWirePro's Hourly USD Spot Index was at -26.0691 (Neutral), while Hourly JPY Spot Index was at 60.3204 (Neutral) at 0300 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.
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