From yesterday: “USD/JPY stayed in its range despite some volatile bursts before and after the FOMC meeting minutes released yesterday at 20:00 CET. The pair is capped by a strong resistance area around 120.70/121 and supported above 119.30 in the near-term. As long as it stays below the resistance, we still favour a move to test 119.30 and a break here will give scope for a move towards 118.30. The broader range in the pair remains between 121 and 116, and only breaks out of this range will give direction in the medium-term”.

USD/JPY rose to 120.74 yesterday driven by broad strength in the USD. The pair failed at the first key resistance level of by 120.70. It has today retreated to 120.21 but another test at the 120.70 is not to be excluded today. A break of that level and 121 would give scope for a resumption of a broader bullish move. If the pair slips again below 120, we may see a prolonged period of consolidation in this tight range.