USD/JPY fades a spike to 109.09

• BOJ boosts short-term JGB purchases.
• But the resulting Yen weakness was short-lived.
• Yen ignores comments from BOJ officials
• Eyes Trump speech.

The Bank of Japan (BOJ) increased the purchases of bonds maturing in 3-5 years by JPY 30 billion, but the resulting Yen weakness was transient.

USD/JPY clocked a high of 109.09 before falling back to 108.80 levels. BOJ news did not have a longlasting impact, possibly because this was a routine operation and as the bank said earlier this month, such minor tweaks do not reflect a policy change.

Also, the Japanese Yen is paying no heed to dovish comments from BOJ's Kuroda and Iwata.

That said, the pair seems to have built a base below 108.80 levels amid oversold technical conditions, and hence could retake 109.00 levels. However, a lot depends on the President Trump first state of the union address.

USD/JPY Technical Levels

FXStreet Chief Analyst Valeria Bednarik writes, "the upward potential seems limited short-term, as in the 4 hours chart, the price remains well below bearish moving averages, as the RSI indicator consolidates around 44. The Momentum in the mentioned chart heads higher around its mid-line, but further gains are more likely on a break above the 109.20/30 region, where sellers are now aligned."

Support levels: 108.60 108.25 107.90

Resistance levels: 109.25 109.70 110.10