USD/JPY pops and drops on BOJ news

• BOJ increased purchases of bonds maturing in 5-10 years.
• USD/JPY fades spike to 109.66.
• Fails to take out key descending trendline.

The BOJ's decision to buy more bonds maturing in 5-10 years saw Yen take a hit across the board.

The USD/JPY pair jumped to a session high if 109.66, before falling back to square one, i.e. 109.33 (1-hour 200-MA) levels.

The decline from 109.66 to 109.33 also marks a failure on the part of the USD bulls to take out the descending trendline (drawn from Jan. 8 high and Jan. 23 high), though it is not surprising as the BOJ made it clear last month that day-to-day changes in the bond purchase amount do not indicate shifts in the monetary policy.

That said, the trendline hurdle could be breached in a convincing manner if the US wage growth figures beat estimates. However, if equities react negatively to the rising yields, then the USD/JPY pair could end up trapping the bulls on the wrong side of the trade

USD/JPY Technical Levels

As of writing, the spot is trading at 109.37.  Bears could attack 108.97 (Jan. 24 low - support on 4-hour), If the current 4-hour candle closes below 109.32 (downward sloping 50-MA). On the higher side, a 4-hour close above the descending trendline hurdle (now seen at 109.66) would add credence to the bullish symmetrical triangle breakout and open doors for a sustained rally to 110.23 (38.2% Fib R of 113.39-108.28).