USD/JPY analysis: closer to October high post-Fed

USD/JPY Current price: 113.95

  • The US Federal Reserve monetary policy decision brought no surprises but helped the greenback higher through Treasury yields.
  • USD/JPY poised to retest October high at 114.54.

The USD/JPY pair broke higher mid-US afternoon nearing the 114.00 figure amid a generalized dollar's recovery ahead of the US Central Bank monetary policy decision. The pair traded with an upward tone ever since the day started, as Asian and European equities followed the lead of Wall Street. Furthermore, Treasury yields resumed their advances, with the benchmark yield for the 10-year note reaching 3.24% ahead of the opening. Japanese data released at the beginning of the day was mixed, as Machinery Orders plunged in September, down by 18.23% MoM and by 7.0% YoY, but the trade surplus in the same month was up to ¥323.3B. Also, the Eco Watchers survey showed that the business assessment of the current situation improved, with the index up to 49.5, although the outlook remains sour, down to 50.6 from the previous 51.3. The country will release the September Tertiary Industry Index.

Technically, the 4 hours chart for the pair shows that the price is further above its 100 and 200 SMA which gain upward traction over 100 pips below the current level, while technical indicators reached overbought readings, now stabilizing at daily highs, with no directional strength but still maintaining the risk skewed to the upside. Further gains above 114.10 should spur demand for the pair, with the next probable bullish target at 114.54, October monthly high.

Support levels: 113.85 113.40 113.00    

Resistance level: 114.10 114.55 114.90

View Live Chart for the USD/JPY

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