USD/JPY sold off for the past couple of weeks and is now testing the former resistance at the 94.00 major psychological level. 

The pair seems to be finding support around this area, which is also in line with the 50% Fibonacci retracement level on the 4-hour time frame.

Take note that the BOJ is set to make its interest rate decision later this week but traders could start pricing their expectations way ahead of the actual event. In his previous speech, Kuroda noted that the central bank is ready to implement the necessary quantitative and qualitative measures, the details of which haven’t been disclosed yet. Kuroda might’ve simply been waiting for BOJ policymakers to convene first before announcing concrete steps, but additional asset purchases are eyed.

The yen could sell off as the event draws nearer and nearer. In the meantime, the U.S. is set to print its ISM manufacturing PMI during today’s U.S. session. An improvement over the previous month’s figure could boost the U.S. dollar against the yen.

Stochastic is making its way out of the oversold region, which suggests that dollar bulls currently have the upper hand. If you plan to buy this pair, make sure you set your stop below the 61.8% Fib level.

By Kate Curtis from Trader’s Way