USD/JPY bears look for a break below 111.03?

• USD/JPY bears in control.
• USD/JPY to test key 111.85 level?

USD/JPY is currently trading at 111.38 with a high of 111.46 and low of 111.31 within a bearish formation after US stocks failed to impress and markets turn risk-off on the Chinese noise.

At the same time, there is speculation that the BOJ may consider reducing its QQE while doing so in stealth fashion already and all eyes will be on the BoJ next week for messages on yield curve control - (yen shorts are nervous). Investors are seeing a more positive macro outlook and envisage central banks taking the foot of QE. 

Where next for USD/JPY?

USD/JPY is now basing well below the psychological level of 112.00 level and there was little in the way down to 111.26. Traders now shift attention to the 50% level of the of Sep-Nov rise and Nov's low at 111.03-110.85. these levels will be key as we head in towards US CPI and retails sales on Friday.

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that the 4 hours chart shows that the pair is still biased lower, as it stands well below its 100 and 200 SMAs, both lacking directional strength, while technical indicators hold within an oversold territory, losing their downward momentum but far from supporting additional gains ahead. 

"The pair can gain some traction upwards above 111.60, while selling interest will probably resurge on an approach to the 112.00 figure," Valeria added.