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USD/JPY bulls buying cheap dollars with caution

FXStreet (Guatemala) - USD/JPY is trading at 118.37, up 0.55% on the day, having posted a daily high at 118.50 and low at 117.58.

USD/JPY remains bid in the overall bullish trend and pullbacks are proving an entry for cheap dollars on target for 120 on the upside as the first psychological level. That said, caution comes with being on the bid as we have already heard that the weakness of the Yen has come too fast from officials in Japan, but against a back drop of Japan's aggressive policy then markets are positioned in alignment with this and the inevitable weakness of the Japanese currency.

The week ahead brings in risk factors for the US in the 3Q GDP to begin with, while tonight we will get the BoJ minutes and Kuroda’s speech. While we unlikely hear anything new to tip the scales here, Japan reports a host of other data later in the week including employment, retail sales, and inflation.

“The BOJ has preempted the data. However, just like the unexpected contraction in Q3 GDP put the BoJ aggressive measures in a better light, so too will the expected further easing of price pressures. When adjusted for the sales tax increase, the key rate of inflation for the BOJ may slip further, possibly below 1.0%”, explained analysts at Brown Brother Harriman.

USD/JPY noteworthy levels

Current price is 118.35, with resistance ahead at 118.38 (Yesterday's High), 118.50 (Daily High), 118.84 (Daily Classic R2), 119.31 (Daily Classic R3) and 119.32 (Weekly Classic R1). Next support to the downside can be found at 118.28 (Daily Classic R1), 118.16 (Hourly 20 EMA) and 118.01 (Daily Open).

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