USD/JPY Forecast: Waiting for the Fed around 109.00

Valeria Bednarik FXStreet

USD/JPY Current price: 109.09

The US Federal Reserve will announce its monetary policy decision this Wednesday.
Japan’s February Merchandise Trade Balance Total posted a surplus of ¥217.4 billion.
USD/JPY retains its monthly gains, the upcoming direction will depend on the Fed.

Markets are quieter this Wednesday as speculative interest waits for the US Federal Reserve. The central bank is having a monetary policy meeting and will unveil its decision in the American afternoon. The central bank is not expected to introduce changes to the current policy, as widely anticipated by Chief Jerome Powell, as the employment sector is way below its pre-pandemic levels. The Fed has long ago announced that it would tolerate inflation above the 2% target for some time.

In a speech not so long ago, head Powell suggested that bond yields volatility is not a concern for policymakers, neither a factor to decide a change in the monetary policy. Any change of view in this matter could spur wild volatility across the FX board.

Data wise, Japan published the February Merchandise Trade Balance Total, which posted a surplus of ¥217.4 billion, missing expectations, as imports were up by 11.8% while exports decreased by 4.5%. Ahead of the Fed, the US will publish February Building Permits and Housing Starts.

USD/JPY short-term technical outlook

The USD/JPY pair trades just above the 109.00 figure, losing its bullish potential. In the 4-hour chart, the price is hovering around a mildly bullish 20 SMA, while technical indicators turned south, with the Momentum in neutral territory and the RSI around 55. A steeper decline could take place if the pair breaks below 108.80, although it all depends on the Fed and how government bond yields react afterwards.

Support levels: 108.80 108.40 108.05

Resistance levels: 109.30 109.65 110.00

View Live Chart for the USD/JPY

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

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.

EUR/USD holds firm near 1.1850 amid USD weakness

EUR/USD remains strongly bid around 1.1850 in European trading on Monday. The USD/JPY slide-led broad US Dollar weakness helps the pair build on Friday's recovery ahead of the Eurozone Sentix Investor Confidence data for February.

GBP/USD holds medium-term bullish bias above 1.3600

The GBP/USD pair trades on a softer note around 1.3605 during the early European session on Monday. Growing expectation of the Bank of England’s interest-rate cut weighs on the Pound Sterling against the Greenback.

Gold remains supported by China's buying and USD weakness as traders eye US data

Gold struggles to capitalize on its intraday move up and remains below the $5,100 mark heading into the European session amid mixed cues. Data released over the weekend showed that the People's Bank of China extended its buying spree for a 15th month in January. Moreover, dovish US Fed expectations and concerns about the central bank's independence drag the US Dollar lower for the second straight day, providing an additional boost to the non-yielding yellow metal.

Cardano steadies as whale selling caps recovery

Cardano (ADA) steadies at $0.27 at the time of writing on Monday after slipping more than 5% in the previous week. On-chain data indicate a bearish trend, with certain whales offloading ADA. However, the technical outlook suggests bearish momentum is weakening, raising the possibility of a short-term relief rebound if buying interest picks up.

Japanese PM Takaichi nabs unprecedented victory – US data eyed this week

I do not think I would be exaggerating to say that Japanese Prime Minister Sanae Takaichi’s snap general election gamble paid off over the weekend – and then some. This secured the Liberal Democratic Party (LDP) an unprecedented mandate just three months into her tenure.

Bitcoin, Ethereum and Ripple consolidate after massive sell-off

Bitcoin, Ethereum, and Ripple prices consolidated on Monday after correcting by nearly 9%, 8%, and 10% in the previous week, respectively. BTC is hovering around $70,000, while ETH and XRP are facing rejection at key levels. Traders should be cautious: despite recent stabilization, upside recovery for these top three cryptocurrencies is capped as the broader trend remains bearish.