USD/JPY shows resilience around 131.00 mark as market awaits Fed’s next move


  • USD/JPY hovers near the 131.00 level ahead of a crucial Fed decision.
  • US Dollar is under pressure amid struggling global banking sector and excess liquidity.
  • Investors brace for potential volatility as the market anticipates for 25 bps rate hike from Fed.  

USD/JPY hovers around the 131.00 mark during Tuesday's Asian session, maintaining its bearish bias.

Although US Treasury (UST) bond yields were boosted on Monday, USD/JPY failed to capitalize significantly. This can be attributed to the struggling global banking sector, as many commercial banks faltered last week. Consequently, investors rushed to purchase UST bonds, causing yields to decline.

USD/JPY closely follows the UST yield direction, so, unsurprisingly, the US Dollar remains under pressure. Earlier this week, the Federal Reserve restarted swap lines to provide US Dollar liquidity to central banks in need, in addition to the Fed's discount window. This rapid action has flooded the market with excess US Dollar liquidity, resulting in widespread weakness.

As the market heads toward Wednesday's FOMC meeting, caution is advised. The global banking system is already strained, and a further increase in borrowing costs could exacerbate existing issues. The market anticipates a 25 basis point (bps) rate hike from the Fed.

Trading during the FOMC event requires extra caution, as this meeting differs from a typical one with pre-set expectations. With investors divided over various variables, volatility is expected. It is always recommended to be especially careful, as the market could reverse during the press conference.

It is crucial to pay attention to Fed Chair Jerome Powell's press conference, as the media will scrutinize his statements for any unexpected comments that could trigger market volatility.

Levels to watch

USD/JPY

Overview
Today last price 131.34
Today Daily Change 0.01
Today Daily Change % 0.01
Today daily open 131.33
 
Trends
Daily SMA20 135.06
Daily SMA50 132.53
Daily SMA100 135.1
Daily SMA200 137.46
 
Levels
Previous Daily High 132.65
Previous Daily Low 130.54
Previous Weekly High 135.12
Previous Weekly Low 131.56
Previous Monthly High 136.92
Previous Monthly Low 128.08
Daily Fibonacci 38.2% 131.34
Daily Fibonacci 61.8% 131.84
Daily Pivot Point S1 130.36
Daily Pivot Point S2 129.4
Daily Pivot Point S3 128.25
Daily Pivot Point R1 132.47
Daily Pivot Point R2 133.61
Daily Pivot Point R3 134.58

 

 

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