USD/JPY broke higher in early London trade, but was unable to eclipse resistance near the 20-day moving average at 119.65. The high so far has been 119.77, which is the loftiest mark in six days. The gain extends the rebound from last Thursday’s 118.06 low, and gives the impression that the 120.00 level continues to exert some kind of gravitational pull on the pair, which has been orbiting around this level since late August.
A looming big focus for yen markets is the BoJ policy meeting on Oct-30, as it will be accompanied by updated growth and inflation forecasts, and because there is a possibility of the central bank announcing an expansion in the QQE program. BoJ Governor Kuroda recently seemed to rule this out, though some economists still think the central bank will in order to ward of yen appreciation and offset the risks posed to production by China’s slowing economy.
Support on the currency pair is seen near last week’s lows at 118. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a buy signal. This occurs as the spread (the 12-day moving average minus the 26-day moving average) crosses above the 9-day moving average of the spread. The index moved from negative to positive territory confirming the buy signal.