Has USD/JPY Peaked?

Has USD/JPY Peaked?

Has USD/JPY Peaked?

Dollar bulls are struggling to keep their heads above water ahead of this week’s FOMC meeting. For the first time in 9 years the Federal Reserve is expected to raise interest rates and selling U.S. dollars could be the smartest trade. Most investors would normally look to buy a currency ahead of a rate hike but in the case of the Fed, their well-telegraphed decision could mean more losses for the greenback. We have already seen investors bail out of their long USD/JPY trades as the currency pair carved out a bottomed in early December. With only a few more days to go before the historic announcement there’s very little chance of a strong pre-FOMC dollar rally. Everyone who wants to be long dollars ahead of the rate decision is probably long already with more traders moving to the sidelines as the big day nears.

However on a fundamental and technical basis, we don’t expect major losses in USD/JPY. 120 is a very important support level and if that is broken 119 should hold. Resistance is at 122.25, a former support turned resistance level.

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