The USD/JPY is recovering nicely from the week's opening bearish gap.
Risk appetite swings higher ahead of a packed week that sees plenty of central bank action on both sides of the pond.
The USD/JPY is trading sharply higher in Monday action, lifting to 109.80 as traders resume bidding, undeterred by the weekend's G7 trade spat.
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The Dollar-Yen pairing is lifting off of last week's swing low to end last Friday as markets step into the new week on decidedly bullish footing, shaking off the weekend's trade developments following US President Trump's early departure from the weekend's G7 summit as the gap widens between Trump and the US' closest allies. Market participants are turning their backs on the news, choosing to focus on a busy week ahead that sees decisions from both the FOMC and the Bank of Japan (BoJ), which could see a rate hike from the US FOMC and a BoJ rate deicision where traders will be closely watching the BoJ for changes to the rhetoric in their monetary policy statement.
USD/JPY levels to watch
As noted by FXStreet's own Omkar Godbole, "The market does appear indecisive in 110.27-108.11 range. However, when viewed against the backdrop of the bearish outside-week candle, the bears appear to be in control, meaning the pair will likely find acceptance below 108.11 and extend losses to 107.32 (September 2017 low). If the pair manages to cross the 200-day MA, then the long-term descending trendline hurdle (drawn from August 2015 high and December 2015) could be put to test. Currently, the trendline resistance is located at 111.25. A weekly close above that level would signal a bullish breakout (long-term bearish-to-bullish trend change)."
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