Jakarta, GIC Trade –  The Japanese Yen Forex pair was seen strengthening and moving to its daily low in the 131.40 area as the Bank of Japan (BoJ) firmly considered a way out of its decade-long ultra-loose monetary policy.

The chances of the BoJ exiting its ultra-loose monetary policy have accelerated after it announced that the central bank will review the side effects of its massive monetary easing at its policy meeting next week, the Yomiuri said, citing Reuters.
 
The Yomiuri also added that "the BoJ is reviewing because interest rates are skewed in the market even after last month's change in its bond yield curve policy".
 
In addition, the yen's strengthening was also supported by the yield on the 10-year US Treasury note which fell to 3.52 percent amid easing inflation, pushing the US dollar lower.
 
The softening inflation rate supports market expectations that the US central bank or the Federal Reserve (The Fed) will be slower in terms of raising its benchmark interest rate at its monetary policy meeting in February.
 
Meanwhile, San Francisco Fed President Mary Daly told the Wall Street Journal (WSJ) that she would pay close attention to the Consumer Price Index (CPI) data and that both options for further interest rate hikes of 25 and 50 basis points (bps) were wide open.
 
Fundamentally, the BoJ's hawkish statement and also the decline in US bond yields support the Japanese yen to strengthen further. Then how about technically, see the following analysis:
 
Technical Analysis



USD/JPY is in a downtrend on the 1-hour period with increasingly lower highs (Higher Lower/HL). This is also supported by the MA20 line which intersects the MA200 line. To go down further, it is necessary to break the 131.30 area to the next support which is in the 130.00 area.
 
However, another scenario, referring to the RSI indicator which is already in the oversold area, then the Japanese yen has the opportunity to rebound. To change the bias to bullish, it is necessary to pass the 132.60 area to the next resistance at the 133.85 level.
 
This analysis is a fundamental and technical view used by the author, not a suggestion or invitation. For more information, click the image below.