• USD/JPY gained modestly on Monday as trading activity remained subdued ahead of Japan’s three-day holiday period, keeping moves in the currency pair relatively limited.
•The Bank of Japan raised its policy rate to 1.25% on Friday, the highest level in 31 years, but the widely expected hike failed to support the yen as two dissenting votes and a lack of clear hawkish guidance disappointed investors.
•Alongside the BOJ, the Federal Reserve and European Central Bank also raised interest rates this month, with both signaling that further tightening may be needed to contain inflation amid the prolonged Middle East conflict..
• Geopolitical risks remained elevated as the United States and Iran exchanged fresh threats, while Houthi forces reportedly attacked Riyadh, adding to concerns over a broader escalation in the Middle East.
• U.S. President Donald Trump is scheduled to meet Chinese President Xi Jinping in Washington this week, with markets closely watching the talks for developments on trade and broader U.S.-China relations.
• Immediate resistance is located at 158.13 (Sep18th high), any close above will push the pair towards 159.39(38.2%fib).
• Support is seen at 156.65(SMA20) and break below could take the pair towards 155.55(50%fib)
Recommendation: Good to buy around 156.70, with stop loss of 156.90 and target price of 158.50
