USD/JPY down -0.06% on the day, but bears making way to 112.08 overnight

Currently, USD/JPY is trading at 112.82, down -0.07% on the day, having posted a daily high at 112.97 and low at 112.64.

USD/JPY was based lower overnight in the continuation of the BoJ dip where the price turned south after initial attempts higher towards the 114 handle and eventually dropped to 112.08 and a two-month low. This came as wires crossed with yet more Trump noise, but this time in respect to FX manipulation that he suspects China and Japan as being at the forefront. 

For risk events today, we have the official PMIs that are due in China, followed by Markit manufacturing measures for Japan, Euro Area, UK and US. so we will be busy leading into the FOMC that is unlikely to make waves with inflation under control and many questions surrounding Trump's policies, according to analysts at Westpac.  "ADP private payrolls should report a solid job gain in Jan. ISM is likely to remain positive; however, construction spending is likely to remain weak."

Markets - Get ready for a surprise!

USD/JPY levels

If the pair breaks below 112.00, we are looking directly to the 38.2% retracement at 111.98 and a move through there takes us on a path that could find the base of the cloud, which lies at 109.92. Nearer term, on the hourly USD/JPY chart, the 200 SMA is declining and currently at 113.80, down from the previous hour close at 114.00.  The hourly FXStreet OB/OS Index is showing neutral conditions, alongside the FXStreet Trend Index which is strongly bearish.