USD/JPY analysis: new leg higher still likely, despite FOMC uncertainty

Valeria Bednarik FXStreet

USD/JPY Current price: 104.16

The USD/JPY pair traded as high as 104.47 this Wednesday, the highest since July 29th, and ahead of the release of the FOMC Minutes. Data coming from Japan at the beginning of the day, came better-than-expected as core machine orders dropped 2.2% in August and when compared to July, beating expectations of a 5.5% decline. Also, machine orders rose 11.6% year-on-year, exceeding expectations of a 6.5% advance. The pair retreated after the release of the latest FOMC Minutes which left a sour taste on traders' mouth, as its clear the lack of consensus among US policy makers. Still holding above 104.00, the short term picture for the pair suggests that the downward move may extend, at least in corrective mode, as in the 1 hour chart, technical indicators have turned sharply lower from overbought readings, although the price remains well above its 100 and 200 SMAs, with the shortest around 103.60. In the 4 hours chart, technical indicators have also lost upward strength, but are far from presenting a bearish stance, while the price is well above its moving averages that slowly grind higher, supporting the case of a downward corrective move ahead of a new leg higher.

Support levels: 104.00 103.60 103.20

Resistance levels: 104.50 104.95 105.35

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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