USD/JPY lower ahead of the Fed
Kira Iukhtenko, FX BAZOOKA analyst
Early Monday USD/JPY extended the bearish correction from a 5-year high of 103.90, falling ahead of the Federal Reserve meeting on Wednesday. The pair found support at 102.60 and rebounded from here, but for now the upside remains capped by the 103.15 mark. For now the pair still remains in a 2-month bullish channel.
USD/JPY has met significant resistance in the 103.70 area (prior 2013 high), forming a shooting star candle and closing the week at 103.20. The further dynamics of the pair will be defined by the Fed’s announcement on Wednesday. Despite all the tapering talks, we don’t see a high chance for a QE volume reduction in December. That is why the pair could dip lower in the coming week. Break below 102.60 could open the way to the 102.40/20 area (recent lows, 23.6% Fibo from the recent rally) and then to 101.80/60. However, in a longer term we remain bullish for the pair with the next target of 105.55.
Chart. H4 USD/JPY