USD/JPY outlook: Bulls hold grip ahead of Fed and BOJ policy meetings

Slobodan Drvenica Windsor Brokers

USD/JPY

USDJPY keeps firm tone and holds within a narrow range just under new multi-month highs (147.87/95) in European trading on Monday.

Today’s quiet mode is mainly due to lower volumes as Japan is shut for holidays, while traders became more cautious ahead of two key events this week – US Federal Reserve and Bank of Japan policy meetings.

The Fed will end its two-day meeting on Thursday and BOJ meets on Friday, with both central banks widely expected to stay on hold this time, though surprises cannot be ruled out, especially after recent comments from BOJ governor who mentioned possible earlier than expected start of tightening monetary policy.

Markets are likely to face increased volatility this week, with focus on comments from FOMC, in light of recent solid economic data, which partially ease pressure on Fed and BOJ’s guidance about the conditions required to start reversing current negative policy.

Technical structure is positive and reinforced by four consecutive weekly closes above former pivotal resistance, now reverted to strong support at 146.10 (Fibo 76.4% of 151.94/127.22) as well as strong bullish momentum.

Near-term bias is expected to remain with bulls while the action stays above 146.10 and keep in play hopes of final push towards psychological 150 barrier (last time tested in mid-October 2022).

Caution on break below 146.10 which would risk deeper pullback and.

Res: 148.00; 148.59; 148.84; 149.70.
Sup: 147.16; 146.10; 145.06; 144.44.

Interested in USD/JPY technicals? Check out the key levels

1. R3 148.7
2. R2 148.33
3. R1 148.09
PP 147.71
1. S1 147.48
2. S2 147.1
3. S3 146.86

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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