As USD/JPY fades after rebounding from multi-day low, it reflects futures market uncertainty.

Prior to Tuesday’s European session, USD/JPY declines from intraday high to 128.65. The Yen pair so undoes the day be fore’s recovery from its lowest points since late May 2022.

However, the recent performance of the quotation may be related to the lack of activity in the options market ahead of the significant Bank of Japan (BoJ) monetary policy meeting, scheduled for publication on Wednesday.

It’s important to note that at the end of Friday, the one-month risk reversal (RR) for the Yen pair, which measures the ratio between call and put premiums, had fallen by the most since late December.

The daily RR for Monday, however, was up by +0.190. Additionally, the Daily RR was the first positive print in four days.

The Yen pair buyers are thus prepared to go toward the 130.00 round figure before aiming for the hypothetical target of 130.40. It’s important to note that the RSI line is getting close to overbought zone and may test the USD/JPY bulls at 130.40;

 if not, then attention will turn to the 200-HMA level near 131.25. The 131.00 round number may also serve as an additional filter to the north.

On the other hand, the resistance-turned-support line of the aforementioned inverse H&S, which was at 128.75 at the time of press, limits the USD/JPY pair’s immediate fall before the 50-HMA level, which is close to 128.30.

If the Yen pair continues to decline past 128.30, the market’s attention will turn to the monthly low at 127.20 and the bottom in May 2022 near 126.35.