USD/JPY traded mixed on Monday after a ministry of finance report showed increased trade deficit and Bank of Japan (BoJ) hinted no additional easing. The pair hit as low as 101.75 during Asian session and then rebounded to 102.76.

At the moment of writing pair is being traded around 102.49, slightly down from today’s high. Bias is bearish because the pair printed Lower Low (LL) in current wave. There are two major resistance levels on upside. First hurdle is at 103.28, 50% retracement and second major resistance is around 104.09 which is a confluence zone of moving averages as well as 76.4% fib level. A break above this confluence zone may threaten 104.83 that is high of current wave down.

On downside first support is seen around 101.39, a break below this level may target 99.93-100.00 zone, 200 DMA and psychological level.

Earlier a government report showed that Japan’s trade deficit rose surprisingly to JPY 1.302 in contrast to median projection of analysts that was 1.223 trillion. Furthermore, BoJ policymakers ruled out any possibility of additional easing as current stimulus is achieving its objectives successfully, according to minutes of their recent monetary policy gathering.

It is to be noted that global stock markets are extending losses on third consecutive day on uncertainty about emerging economies after China’s manufacturing slowed down. Japan’s Nikkei stock exchange which is positively correlated to USD/JPY has already fallen 385.83 points or 2.51% in Asian session.  Federal Open Market Committee (FOMC) upcoming gathering which is due on Jan 28-29 is also putting pressure on stock markets because more tapering by Federal Reserve will strengthen the US Dollar and in turn increase debts of emerging economies.

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