USD/JPY Analysis: direction depends on Fed’s announcement

Valeria Bednarik FXStreet

USD/JPY Current price: 108.19

Japanese trade deficit smaller-than-anticipated amid plummeting imports.
USD/JPY could near 109.31 on a hawkish Fed’s decision.

The USD/JPY pair trades uneventfully this Wednesday in the 108.10/20 price zone, waiting for the US Federal Reserve. Market’s mood is mixed ahead of the event, as equities are up, amid news coming from Arabia Saudi indicating that the country will be back to full production by the end of the month, while government debt yields are down, ahead of Fed’s decision.

Japan released overnight the August Merchandise Trade Balance Total, which posted a deficit of ¥-136.3B, much better than the expected ¥-355.9B and the previous ¥-250.7B. The improvement was a result of collapsing imports, down by 12% in the month from -1.2% in July. Exports, on the other hand, contracted by less-than-anticipated, falling by 8.2%.

USD/JPY short-term technical outlook

Despite the limited intraday range, the USD/JPY pair is trading near the seven-week high set this week at 108.36. The short-term picture is neutral-to-bullish, as, in the 4 hours chart, it keeps consolidating above a flat 20 SMA, while technical indicators hold within positive ground, the Momentum easing modestly and the RSI directionless around 60. The pair’s direction will depend on how the market reads the Fed’s decision. Should the market see it as hawkish, the pair could approach August high at 109.31, while if it’s seen as dovish, the pair could pull back to 107.00/10.

Support levels: 107.90 107.45 107.10

Resistance levels: 108.35 108.60 108.90

View Live Chart for the USD/JPY

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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