• Yen bulls remain poised for more, but bullish bets are beginning to build in derivatives.
• The US Fed's interest rate decision drops this week, and traders are beginning to coil in anticipation.

The USD/JPY pair is testing lower in the early week's Asia session, touching 105.67 before a brief bounceback to the 105.75 area.

Bullish interest beginning to build in JPY

The Yen opens the new week on the strong side, and bullish momentum looks set to continue if risk appetite continues to sour in the face of ongoing trade war fears from Trump's tariffs on steel and aluminum which come into effect on March 23rd, as well as further duties planned on $60B worth of Chinese goods bound for the US market.

The technical picture in the USD/JPY is beginning to rebalance, but the onus remains on the DXY to correct the fall, and a failure to shrug off geopolitical tensions could evaporate the Greenback's chances. Options are showing a buildup of bullish interest in the USD/JPY, but a continued drop into the 105.00 level could still be on the cards. With little high-impact macro data on the calendar for this week except for the widely-expected Fed rate increase on Wednesday at 18:00 GMT, the week's focus is going to be US inflation and interest rates.

USD/JPY Technicals

The pair is dropping away from 106.15 (8-day EMA) and resistance has built up from March's high of 107.30, with support thinning at Friday's low of 105.60 and March's low of 105.25.