The dollar finally broke out of the 80-pip range that had contained it against the yen for over three weeks, reaching a fresh four-month high of 77.85 from an earlier low of 76.95.

USD/JPY turned bullish on Tuesday after the Bank of Japan (BoJ) slashed growth forecasts for the current and coming fiscal years, but left monetary policy unchanged. The central bank noted that the European debt crisis is increasingly affecting the Japanese economy

Slow growth and an easy-money central bank likely put pressure on the yen, and, in the session ahead, further pressure may be seen upon release of Japanese Merchandise Trade Balance data; Japan is expected to report the first merchandise trade deficit in a generation.

At time of writing, the paring has ended trade in New York 0.83% higher on the day, at 77.65, facing the next resistance at 77.93 (Nov. 2 low) ahead of 78.07 (Dec.2) then 78.15 (Nov. 30 low). To the downside, support lies at 77.50 (Oct.12 high), 77.33 (Jan.6 high) and 77.08 (Oct.20 high).

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