Tomorrow the marquee event of the month finally arrives. The Fed meeting could set the tone for USDJPY trade for weeks to come. The issues are well known. If the Fed hints that it is open to more than 2 rate hikes in 2017, the greenback will soar as US yields surge. If on the other hand the Fed remains non-committal and keeps the dot plot at the current level, the dollar is likely to sell off. So instead of speculating about direction, it may be worthwhile to consider the key levels in USDJPY should either scenario pan out.

The dollar bullish trade could quickly take USDJPY towards the 117.00 level but beyond that the pair runs into much more chunky resistance at the 118.00 level from the start of this year. Beyond that, the 120.00 figure will act as massive resistance for the rest of the year.

In dollar bearish scenario the first level of support is 113.00 but given the very overbought nature of the pair USDJPY could easily slip towards 111.00 and even possibly 110.00 on paring of positions into the year end.

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