• USD/JPY buyers look to fight back control amid firmer yields.
• Fed/BOJ divergence is likely to keep any downside in check.
• Daily RSI is flirting with overbought territory, more gains in the offing?

USD/JPY is treading water above 130.00, fluctuating between gains and losses, as markets remain indecisive ahead of the critical Fed interest rate decision.

Although the Treasury yields hovering near three-year highs is lending support to the spot while the upside remains capped by the US dollar weakness.

The Fed is on track to hike the interest rates by 50 bps at its May meeting. Meanwhile, the BOJ came out ultra-dovish last week, widening the monetary policy divergence and the underpinning currency pair.

Technically, USD/JPY’s daily chart shows that the 14-day Relative Strength Index (RSI) is off the extremely overbought region just above the 70.00 level, suggesting that there could be a fresh leg higher in the offing.

USD/JPY: Daily chart

If buyers regain momentum, then a fresh advance towards the rising trendline resistance at 131.75 will be inevitable.

Ahead of that, the 131.00 round figure could challenge the bearish commitments.

On the downside, the pair could retest the daily low of 129.85. Friday’s low of 129.31 will be next on the sellers’ radars.

USD/JPY: Additional levels to consider