We are long USD/JPY and still have long bias and there is no reason to switch it. So of course we will be looking for opportunities to buy USD/JPY from our levels of interest.
Before BOJ, comes FOMC meeting on Wednesday and it is no surprise that Fed has the ability and have done it repeatedly in the past to kick the dollar where it hurts the most. So there we might get an entry into USD/JPY at lower levels. We believe anything below 104 will be a bargain.
If Fed is sanguine and still keep on singing data dependent chorus with hawkish tenor then we have to look at BOJ release for the lower entry. If BOJ throws any other number than the highest rumored at that point ( currently 30 trillion ) then of course market will throw tantrum and send USD/JPY lower. Besides keep this in mind that it will be the end of the week trading day so not all what is being conveyed by the market will be the truth ! In that scenario, if USD/JPY plummets then, we may get a chance.
Please keep this in mind that BOJ event can be very volatile and many things depend upon the communication from BOJ too. So until and unless something disastrous or less committed comes out of BOJ, we will keep trading USD/JPY from buy side. Besides recent CFTC data shows that traders are holding roughly 40 K long JPY contracts. So you can think about the pain it will create in case of big short squeeze. If market is short and still the pair is going in other direction, it is clear indication that you need to stay long ! Because if not today then tomorrow that dam will break and they have to either liquidate or switch. Especially when is on your side.
At 107.50, our major interim target has been reached. Also, 107.50 area is natural resistance point on the chart and it is normal for a pair to retrace. But nothing is serious until USD/JPY breaches 102 on downside. So try to get long as close to that level as possible. Stay long and 110 is not that far :)