USD/JPY has been one of the more prominent currency pairs among the majors in recent times as divergence between the US and Japan saw an unprecedented rally in the pair over the past few years.
After a period of consolidation around ¥120.00, the pair took a leg higher recently and rallied to as high as ¥125.86. Since then the pair has pulled back into support, which comes in around ¥123.21.
This level is the 38.2% retracement of the May-to-June rally and it seems to be encouraging some buyers. Given the US economy has shown signs of improvement, there is a possibility we’ll get some upbeat commentary from the Fed. This would be positive for the greenback and could see USD/JPY resume its uptrend.