USD/JPY: at 3-week highs ahead of Fed

USD/JPY Current price: 110.55

Dollar raises ahead of Fed's decision as market participants anticipate a rate hike.
US Treasury yields pressure their weekly highs, adding to the bullish case of the pair.

The USD/JPY pair is up to fresh 3-week highs as expectations that the US Federal Reserve will pull the trigger later today are pushing the dollar higher across the board, alongside with a persistent positive mood after the Trump-Kim meeting and Brexit news, which saw PM May score her first parliamentary victory in a long time. In the meantime, US Treasury yields hold near their weekly highs with the yield for the 10-year note around 2.97%.

The Fed's monetary policy meeting is the key event of the day, with the market expecting a 25 bps rate hike. Speculative interest will be also closely watching the dot-plot, looking for a confirmation, or denial of a fourth rate hike this year and a more clear picture for the upcoming years. That would be the best case scenario for the dollar and could see the pair extending its advance up to 111.39, May high.

Short-term, and according to the 4 hours chart, the upside is favored despite the absence of bullish momentum, as the pair remains comfortable above its 100 and 200 SMA, and above the 61.8% retracement of its latest daily slump at 110.15. Technical indicators in the mentioned chart have reached overbought readings before partially losing their upward strength, far from signaling a reversal and rather reflecting a pause ahead of the big event that will take place in the American afternoon.

Support levels: 110.15 109.70 109.35

Resistance levels: 110.80 111.05 111.40

View Live Chart for the USD/JPY

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