How is the USD/JPY pair reacting to the dollar’s rally on Wednesday?

At the time of writing, the USD/JPY is trading at 134.17, up by 0.54%. The dollar rallied a little bit against the Japanese yen during the US trading session on Wednesday, but it is obvious that the American currency is struggling to shyly hang on to gains later in the session away from the 200-Day EMA.

The forex market is trying to break to the upside, but lack of liquidity is a serious obstacle. If a break could be realized, it is potential to reach the ¥138 mark, where the market broke down from after BoJ’s policy announcement.

On the other hand, the pair may drift down to the ¥132 level, which offers a certain amount of support. The existence of two scenarios helps keep very noisy market conditions, paving the way for lots of hesitation between now and the beginning of the new year.

The USD/JPY has advanced steadily since the December’s 500-pip fall after the BoJ removed the cap of 0.25% to the 10-year Japanese Government Bond, so, that the Yen could strengthen, though it has erased some of its gains.