The Japanese Yen (JPY) maintained its bullish bias through the early European session on Wednesday (February 5), with the USD/JPY pair holding just above the 153.00 mark, its lowest level since December 13. A rise in Japanese real wages reaffirmed bets that the Bank of Japan (BOJ) will raise interest rates again, which in turn, provided a strong boost to the JPY. Moreover, prospects for further policy easing by the Federal Reserve (Fed) would result in a further narrowing of the interest rate differential between the US and Japan. This turned out to be another factor driving flows towards the lower-yielding JPY.

Meanwhile, expectations that the Fed will further lower borrowing costs later this year dragged the US Dollar (USD) to a fresh weekly low and contributed to the heavily bid tone surrounding the USD/JPY pair. However, concerns that Japan could also be a target of US President Donald Trump's tariffs, along with the prevailing risk-on environment, might hold traders from placing fresh bullish bets around the safe-haven JPY. Traders now look forward to the US ADP report and the US ISM Services PMI for near-term opportunities later during the early North-American session.

From a technical perspective, an intraday slide and acceptance below the 154.00 mark could be seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart have been gaining negative traction and are still far from being in the oversold territory. This, in turn, suggests that the path of least resistance for the USD/JPY pair is to the downside and supports prospects for a further depreciating move. Hence, a subsequent fall towards the 153.00 mark, en-route the 100-day Simple Moving Average (SMA), currently pegged near the 152.45 region, looks a distinct possibility.

On the flip side, any recovery attempt might now confront immediate resistance near the 154.00 round-figure mark. However, some follow-through buying might prompt a short-covering rally and lift the USD/JPY pair to the 154.70-154.75 hurdle en-route the 155.00 psychological mark. Meanwhile, any further up-move could be seen as a selling opportunity and remain capped near the 155.25-155.30 region. The latter should act as a pivotal point, which if broken decisively will negate the negative outlook and shift the near-term bias in favour of bullish traders. (Newsmaker23)

Source: FXstreet