USD/JPY clocks fresh three-week high, focus on Fed's long-run rate forecasts

  • USD/JPY is solidly bid, having scaled the 200-day moving average (MA) yesterday.
  • Focus on the Fed - an Upward revision of terminal rate could bode well for the greenback.

The USD/JPY pair hit a high of 110.69 a few minutes ago, having witnessed a bullish break above the 200-day moving average of 110.18 yesterday.

Fed rate hike has been priced-in

A 25 basis point rate hike has been priced in with the CME FedWatch showing a 96.3 percent probability of a lift today.

So, the focus will be on the terminal rate. The dollar will likely pick up a strong bid if the Fed hints at a faster pace of rate rises and pushes up long-run interest rate forecasts. As of now, the central bank sees interest rate rising to 3.4 percent in 2020.

On the other hand, a dovish hike could yield a broad-based sell-off in the greenback. As of writing, the spot is trading at 110.62

USD/JPY Technical Levels

Resistance: 110.84 (Nov. 27 low), 111.40 (May 21 high), 111.95 (long-term falling trendline resistance).

Support: 110.18 (200-day moving average), 109.83 (bullish 10-day moving average), 109.20 (June 8 low).

  TREND INDEX OB/OS INDEX VOLATILY INDEX
15M Bearish Neutral Shrinking
1H Bullish Overbought Expanding
4H Bullish Overbought High
1D Bullish Overbought Low
1W Bearish Neutral Low

 

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