USD/JPY – Downside Pressure; Buy On Dips

From The FXWW Chatroom – USD/JPY was well-bid into BOJ meeting (30 Oct) on hopes of more QQE which did not materialize. BOJ Governor Kuroda remained confident that the 2% 
inflation target would be achieved on the back of wage increases and a global oil price rebound, though the deadline was pushed back to 2H FY2016 instead of 1H FY2016. The BOJ in its semi-annual economic outlook also expects the economy to recover moderately with growth likely to exceed potential in FY15 and FY16. 3Q15 due on 15 Nov and the two remaining scheduled BOJ meetings for 18-19 Nov and 17-18 Dec will be watched as a result. The window to ease has yet to be closed. Daily technicals suggest some downside pressure in the shortterm, with support at 120.20 (21 and 50 DMAs), 119.66 (38.2% Fibo retracement of 125.28-116.18 downswing). But underlying momentum appears to indicate a bullish bias. We favour buying on dips towards 118.30. Resistance remains at 121.80 (100DMA and 61.8% Fibo retracement). Week ahead brings Oct PMI Mfg (Mon); Oct monetary base, composite/service PMI, consumer confidence (Wed); BOJ minutes (Thu); BOJ Kuroda speaks; Sep leading and coincident index (Fri).  [Maybank] 

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