USD/JPY extends the range play against USD as traders await FOMC meeting minutes
The Japanese Yen continues with its struggle to gain any meaningful traction on Wednesday. Intervention fears underpin the JPY, though the BoJ monetary policy uncertainty caps gains. Traders look to the FOMC minutes for cues about the Fed’s rate-cut path and a fresh impetus.
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The recent range-bound price action warrants some caution before positioning for a firm near-term direction. That said, the recent breakout through the 148.70-148.80 horizontal barrier favours bullish traders. Moreover, oscillators on the daily chart are holding in the positive territory and are still away from the overbought zone, validating the constructive outlook for the USD/JPY pair. It, however, will still be prudent to wait for some follow-through buying beyond the mid-150.00s and the 150.85-150.90 region, or a multi-month top set last week, before positioning for any further gains. Spot prices might then climb to the 151.45 intermediate hurdle en route to the 152.00 neighbourhood, or a multi-decade peak set in October 2022 and retested in November 2023.
On the flip side, weakness below the mid-149.00s could attract some buyers near the 149.25-149.20 area. This is followed by the 149.00 round figure and the 148.80-148.70 resistance-turned-support, which should act as a key pivotal point. A convincing break below the latter will suggest that the USD/JPY pair has formed a near-term top and set the stage for some meaningful corrective decline. The subsequent downfall has the potential to drag spot prices to the 148.35-148.30 region en route to the 148.00 mark and the 100-day Simple Moving Average (SMA) support near the 147.70 zone.
The Japanese Yen (JPY) extends its sideways consolidative price move on Wednesday and remains confined in a one-week-old range against its American counterpart through the Asian session. Geopolitical risks stemming from conflicts in the Middle East and the prolonged Russia-Ukraine war continue to weigh on investors' sentiment. This, along with the recent verbal intervention by Japanese authorities, turns out to be a key factors underpinning the safe-haven JPY.
The US Dollar (USD), on the other hand, languished near its lowest level in almost three weeks touched on Tuesday in the wake of expectations for an imminent shift in the Federal Reserve's (Fed) policy stance. This further contributes to capping the upside for the USD/JPY pair. Traders, however, seem reluctant to place aggressive directional bets and now look to the FOMC meeting minutes, due later during the US session, for cues about the Fed's rate-cut path.
Meanwhile, a recession in Japan fuelled uncertainty about the likely timing of when the Bank of Japan (BoJ) might pivot away from its ultra-easy monetary policy and exit the negative interest rates. This might also hold back traders from placing bullish bets around the JPY and help limit losses for the USD/JPY pair. Hence, it will be prudent to wait for strong follow-through selling before positioning for an extension of the pullback from a three-month peak touched last week.