USD/JPY: heading toward 114.54, October high

USD/JPY Current price: 113.70

  • US Federal Reserve expected to pave the way for a December hike.
  • Treasury yields on the rise pushing USD/JPY pair despite broad dollar's weakness.       

The USD/JPY pair is on the rise, nearing the 4-week high achieved in the heat of the US mid-term elections, amid persistent strength in equities' markets and soaring yields. The pair trades around 113.65, as the relief rally in stocks spread worldwide following strong gains on Wall Street Wednesday. As for US Treasury yields, the benchmark yield for the 10-year note peaked at 3.24% in pre-opening trading, picking up during Asian trading hours after a lackluster auction in the previous American session. The dollar, however, remains soft against most major rivals, a follow-through of post-election reaction, although slowly recovering some ground.

Today, the US Federal Reserve will unveil its latest monetary policy decision. The central bank is largely expected to keep rates on hold, also to pave the way toward a December hike. The Fed won't offer fresh growth forecasts, nor a press conference is scheduled after the event,  which means that the market reaction could be limited, particularly if the accompanying statement maintains the wording of the latest. Market players are not expecting any dovish surprise, which means that in such an unlikely case, the effect on the market will be larger than with a hawkish stance.

Meanwhile, the pair is mild bullish according to technical readings in the 4 hours chart, as it continues developing above directionless moving averages, and with the 100 SMA below the 200 SMA, while technical indicators stand well above their midlines, but with limited upward strength. The scale is leaned to the upside, with gains beyond 113.85 opening doors for an extension toward 114.54, October monthly high.

Support levels: 113.40 112.95 112.60  

Resistance levels: 113.85 114.10 114.55

View Live Chart for the USD/JPY

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