As we all know, the Japanese Yen, a traditional safe haven currency sees high volatility as it is highly sensitive to changes in market sentiment. The JPY volatility has been steadily rising since the Bank of Japan’s monetary policy statement last Friday, and all JPY cross-pairs reacted wildly after the BOJ meeting. GBPJPY has seen the highest intraday volatility amongst the JPY crosses.

BOJ policymakers voted to keep their massive monetary easing unchanged at the meeting, the first since Ueda took the helm at the central bank on April 9. The yen dropped sharply against other major currencies following the BOJ decision and Ueda's press conference. The central bank’s dovish stance spurred a selloff in the yen. "The central bank will continue its monetary easing policy until wage growth takes hold in the country" - BOJ Governor Kazuo Ueda said.

USDJPY hits a fresh 8-week high of 137.75 on Tuesday during the Asian session. While the currency pair slightly reversed from the highs. As of this writing, USDJPY retreats back to below 137.40. The major factor driving the USDJPY price action in the coming days will be the US Federal Reserve interest rate projections and growing recession fears. On the other hand, the EURJPY and GBPJPY also reversed from multi-year highs. During the early European session, EURJPY reached a fresh high of 151.60 since September 2008.

USDJPY may form a triple top-form pattern

USDJPY continues its relentless march higher and is back at levels last seen in 2 months. Considering many significant events lined up in this week the volatility may increase further. However, the pair reached a crucial deciding point ahead of the FED meeting outcome. The currency pair is currently in a consolidation phase after hitting a fresh intra-day high of $137.75.

For this week, 138 remains the key resistance level to watch. USDJPY bulls need to surpass the 138 and 138.30 resistance areas to sustain their bullish momentum. Once it settles above this area, we might expect to see a smooth landing to the next resistance at 139.40 then 140. While another rejection from this area will mean a formation of the triple top pattern on the daily chart and the price action in this zone is very important, we can expect a sharp reversal from here.

Looking at the downside, the immediate support is identified as 136.80 and then 136.30 zones, below which the slide could further get extended towards 135.50. Another point to keep in mind is that any aggressive shorts are to be initiated only below the 135 level. And EURJPY also retreats more than 100 pips from daily highs. Therefore, expecting a deeper pullback retest some support levels below 148.50 and then 147 area.

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