While the tide has turned against USD/JPY due to a shift in perception of the respective monetary policies of the United States and Japan, the medium-term technical outlook hangs on what happens with a widely watched Japanese technical support level.

The Japanese yen rallied against the dollar for a fourth straight session on Tuesday as investors positioned for the possibility that the Bank of Japan will tighten monetary policy next year while the Federal Reserve loosens.
EBS flow data have shown FX traders have fled USD/JPY between Thursday and Tuesday.

The scope is growing for an even bigger USD/JPY loss to eventually probe the bottom of the daily Ichimoku cloud, that currently spans the 145.84-148.66 region.
A break under the cloud base will confirm a shift in the overall technical bias to the downside.
Note 14-day momentum remains negative after turning so on Monday, further highlighting the recent shift against USD/JPY. Related comment.

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