USD/JPY is below 127.50 and has hit eight-month lows at 127.24. Bulls have decreased control, as the Japanese Yen goes on its bullish trend on Monday.

Investors are optimistic that the Bank of Japan (BoJ) could adopt a much more hawkish stance in its upcoming policy meeting. This is mainly due to their failure to maintain its yield curve control (YCC) policy over the last few days. The expectation of a hawkish pivot is driving up Yen sentiment. The 10-year Japanese Government Bond yield increased by 1 basis point to 0.510%, surpassing the BOJ’s 0.5% upper boundary for policy guidance.

The US Dollar is suffering from broad-based weakness due to the ongoing drop in USD/JPY pair. As of now, the US Dollar Index is down by 0.36% and is trading at 101.84. Due to the low trading activity on Monday for Martin Luther King Jr. Day, market fluctuations are being intensified in the US. Consequently, liquidity is reducing and amplifying the overall price movements in key assets.

This week,two potential risk-events stand out: BoJ’s monetary policy announcement and US Retail Sales figures. Last month, the BoJ created a stir by widening the band for 10-year bond yield to 0.5%, up and down from zero, which could have further implications.

The USDJPY pair fell sharply yesterday, exceeding our anticipated targets and reaching the critical support line for short and medium term trades at 128.90, trading within the main bearish channel, which supports the chances of breaking this level, opening the way for the decline to continue and reach additional negative targets of 126.95.

As a result, the bearish trend scenario will continue to dominate in the next sessions, with the price attempting to recover and travel towards 130.80 if it fails to break 128.90.

Today’s trading range is predicted to be between 128.00 support and 129.90 resistance. It looks like the market trend today is going to be headed downward.