The Japanese Yen (JPY) remained weaker against its American rival, with the USD/JPY pair eyeing the 156.00 level during the early European session on Tuesday (1/28). US President Donald Trump reiterated his push for higher universal tariffs, which could reignite inflationary pressures in the US. This, in turn, triggered a modest recovery in the US Treasury bond yields, which undermined the lower-yielding JPY and revived the demand for the US Dollar (USD).

In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, staged a solid rebound from its lowest level since December 18 touched on Monday and provided an additional boost to the USD/JPY pair. That said, divergent Bank of Japan (BOJ)-Federal Reserve (Fed) policy expectations could limit the JPY losses and cap the USD. Traders now eye the US macro data for some impetus ahead of the two-day FOMC meeting starting today.

From a technical perspective, overnight sustained weakness below a multi-month-old ascending trend-channel support was seen as a key trigger for bearish traders. Moreover, oscillators on the daily chart have just started gaining negative traction. This, in turn, suggests that the path of least resistance for the USD/JPY pair is to the downside. Hence, any subsequent up-move might be seen as a selling opportunity near the trend-channel support-turned-resistance breakout point around the 156.00 mark, which should cap the spot prices near the 156.60-156.70 supply zone.

On the flip side, the 155.00 psychological mark now seems to protect the immediate downside ahead of the 154.55-154.50 horizontal zone, the 154.00 round-figure mark, and overnight swing lows, around the 153.70 region. Some follow-through selling will reaffirm the near-term negative outlook and drag the USD/JPY pair further towards the 153.30 intermediate support en-route the 153.00 level.(AL)

Source: FXstreet