USD/JPY Price Analysis: Bounces off 140.90 key support as US Dollar, yields rebound on Fed, BoJ concerns

• USD/JPY clings to mild gains, snaps two-day losing streak.
• Convergence of 50-DMA, one-week-old rising support line favors Yen pair buyers.
• Upbeat US data prods dovish Fed bias, IMF signals challenges for BoJ hawks but markets don’t believe.
• 21-DMA guards immediate upside, MACD signals favor USD/JPY bulls.

USD/JPY picks up bids to print the first daily gains of the week as markets brace for the monetary policy announcements from the Federal Reserve (Fed) and the Bank of Japan (BoJ) with mixed feelings. That said, the Yen pair prints mild gains around 141.10 by the press time.

In doing so, the USD/JPY pair rebounds from a convergence of the 50-DMA and a one-week-old rising support line. Adding strength to the upside bias is the looming bull cross on the MACD.

Fundamentally, the recently upbeat US data and the fresh challenges to the sentiment allow the US Dollar to recover. On the hand, the Japanese Yen (JPY) seems to fail in justifying the hawkish comments from the International Monetary Fund (IMF) as the BoJ officials defend easy-money policies. It should be noted that the latest recovery in the US Treasury bond yields also underpins the Yen price recovery.

Looking forward, the USD/JPY is likely to extend the latest run-up towards the 21-DMA hurdle of around 141.60 before challenging the previous weekly high of near the 142.00 threshold.

In a case where the USD/JPY pair remains firmer past 142.00, the odds of witnessing a run-up towards 144.00 and then to the yearly high marked in June around 145.00 can’t be ruled out.

Meanwhile, a downside break of the 140.90 support confluence, comprising the 50-DMA and a short-term support line mentioned above, could quickly fetch the quote toward the 140.00 round figure before the mid-July swing high surrounding 139.40.

If at all the USD/JPY remains bearish past 139.40, the monthly low of 137.24 will be in the spotlight.

USD/JPY: Daily chart

Trend: Limited upside expected