The Japanese Yen is weighed down by the risk-on mood, though the BoJ’s hawkish tilt limits losses.

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• The Japanese Yen is weighed down by the risk-on mood, though the BoJ’s hawkish tilt limits losses.
• Geopolitical tensions and China’s economic woes could also act as a tailwind for the safe-haven JPY.
• The post-NFP USD buying remains unabated and continues to lend some support to the USD/JPY pair.

The Japanese Yen (JPY) remains under some selling pressure for the second successive day on Monday and slides to a fresh YTD low against its American counterpart during the Asian session. Despite the Bank of Japan’s (BoJ) hawkish tilt earlier this month, an extension of the recent bullish run across the global equity markets is seen as a key factor undermining the JPY’s relative safe-haven status. Furthermore, the blockbuster US jobs data released on Friday provided evidence that the economy is still in good shape, which should allow the Federal Reserve (Fed) to keep interest rates higher for longer. This lifts the US Dollar (USD) to its highest level since December 11 and lends additional support to the USD/JPY pair.

The JPY bulls, meanwhile, seem rather unimpressed by an upward revision of the Japan Services PMI for January, though bets for an imminent shift in the BoJ’s policy stance should help limit deeper losses. Apart from this, persistent worries about a further escalation of geopolitical tensions in the Middle East and China’s economic woes could also act as a tailwind for the JPY. Traders now look to the release of the US ISM Services PMI for some impetus later during the early North American session, which, along with the US bond yields, will drive the USD demand. Furthermore, the broader risk sentiment should contribute to producing short-term trading opportunities around the USD/JPY pair on the first day of a new week.

From a technical perspective, the USD/JPY pair needs to make it through the 148.75-148.80 multiple-tops resistance for bulls to seize near-term control. Given that oscillators on the daily chart are holding comfortably in the positive territory and are still far from being in the overbought zone, some follow-through buying beyond the 149.00 round figure will be seen as a fresh trigger for spot prices. The subsequent move up should allow bulls to aim back to reclaim the 150.00 psychological mark with some intermediate resistance near the 149.60-149.70 region.

On the flip side, the 148.00 mark now seems to protect the immediate downside. Any further decline is more likely to attract fresh buyers and remain limited near the 100-day Simple Moving Average (SMA), currently pegged near the 147.60-147.55 zone. A convincing break below the latter, however, might prompt aggressive technical selling and drag the USD/JPY pair below the 147.00 mark, towards the next relevant support near the 146.75-146.70 region. The downfall could extend further towards the 146.40 zone en route to sub-146.00 levels, or last week’s swing low.

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