USD/JPY traders didn't hesitate to take advantage of Japanese officials' comments overnight and pushed the pair above the psychological 120.00 level.
BOJ Governor Hayami apparently suggested a weaker JPY was a possible policy tool to boost the Japanese economy. However, he counterbalanced that by saying that a weaker yen would have a negative impact on other Asian countries; the BOJ later clarified he was talking purely theoretically, and not about official policy. Japanese finance minister Miyazawa added fuel to the fire by saying that while Japan was not pursuing a weak yen policy, he had no objections to the currency falling of its own accord.
But the rally to a 20-month high of 120.25 failed to trigger significant buy-stops so far. It remains to see whether the U.S. traders, who managed to Northeast, will follow the inconclusive Japanese comments and try lifting the pair toward 121.00.
Analysts warn that the underlying yen demand remains intact due to Japanese exporters and foreigners' interest in purchasing Japanese equities.
The outlook is slightly bullish.

Support: 119.65 (Gann 50-point pivot; targets: 119.15/120.15), 119.00 (38.2% Fibonacci retracement level of the August 1998-December 1999 downtrend), 118.60 (overnight low), 118.25 (Gann 50-point pivot; targets: 117.75/118.75), 116.85 (Gann 50-point pivot; targets: 116.35/117.35), 117.06 (20-day moving average), 115.50 (Gann 50-point pivot; targets: 115.00/116.00), 116.00 (60-day moving average), 114.56 (Feb. 16 low), 114.35 (Feb. 6 low).
Resistance: 120.25 (overnight high; 20-month high), 121.05 (Gann 50-point pivot; targets: 120.55/121.55), 122.50 (Gann 50-point pivot; targets: 122.00/123.00), 122.77 (July 8, 1999, peak), 124.00 (Gann 50-point pivot; targets: 123.50/124.50), 124.75 (May 29, 1999, peak).