USD/JPY Holding Above 149.00 As The BoJ Decision Comes Into Focus

USD/JPY spent Monday's post Asia close tracking sideways. Dips under 149.00 were supported, while equally on the topside we couldn't sustain moves above 149.30. We track close to 149.10/15 in early Tuesday trade, having lost a little ground (in yen terms) in aggregate for Monday's session.

• Broader USD sentiment was supported on Monday, the BBDXY gaining nearly 0.20% to 1237.84. US yields rose a touch, with fresh YTD yield highs across 2- and 5-year tenors whilst TY futures test the bear trigger. This was the main USD support point.
• For USD/JPY today's focus rests on the BoJ decision, as the central bank debates whether to immediately terminate its negative interest rate policy or postpone such action for another month and a half. Our bias rests with a shift away from NIRP today, see our preview here, although we note it is close call.
• Focus will also rest on other parts of the policy framework such as YCC, which is also likely to be removed, although bond purchases are expected to continue in some form to cap yield gains.
• In terms of technicals for USD/JPY, the pair is consolidating after extending its most recent bounce from 146.49, the Mar 8 / 11 low. A resumption of weakness would signal scope for a move towards 145.90, the Feb 1 low and a key support. A continuation higher would instead signal scope for gains towards 150.08, the Mar 6 high, ahead of the 150.89 key resistance, Feb 13 high.
• Beyond today's BOJ meeting outcome, the FOMC decision will come into focus. US-JP yield differentials are back close to YTD highs across the 2 and 10yr tenors.