USD/JPY analysis: consolidating ahead of Fed's announcement
|USD/JPY Current price: 111.34
- BOJ Minutes to be out today, largely anticipated to lack surprises.
- US Federal Reserve's announcement could finally wake up the USD/JPY pair.
The USD/JPY pair settled for a third consecutive day around 111.40, although it posted a lower low and a lower high for a third consecutive day, falling to 111.15 before bouncing some. The dollar was under pressure ever since the week started, as softer-than-expected US data lately anticipates another dovish outcome from the US Federal Reserve this Wednesday. The decline is being limited by also disappointing Japanese data, with the market unable to make up its mind on which of these two currencies is now the weaker. Japan will release the Minutes of its latest monetary policy meeting during the upcoming Asian session, alongside the final versions of the Coincident and the Leading indexes for January. The Minutes has little chances of surprising market's participants, with the focus on how concerned policymakers are about the global economic downturn.
The pair remains stuck to converging 100 and 200 SMA in the daily chart, while technical indicators hold right above their midlines, suggesting that the upward potential is still limited. Shorter term, however, the 4 hours chart shows that the risk of a bearish turn remains high, as the pair is struggling to hold above the 100 SMA which anyway maintains a bullish slope. Furthermore, technical indicators recovered from their intraday lows, but quickly lost upward strength, still developing within negative levels. The risk of a downward extension will increase if the pair loses the 111.00 mark, more likely in the case the US Federal Reserve disappoints more than anticipated.
Support levels: 111.30 111.00 110.75
Resistance levels: 111.80 112.15 112.45
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