FxWirePro: USD/JPY hit 3-week low, greenback depressed ahead of US Federal Reserve monetary policy decision

USD/JPY chart - Trading View 

USD/JPY is extending weakness for the 3rd straight session, outlook remains bearish. The major was trading 0.15% lower on the day at 105.28 at around 04:40 GMT after closing 0.26% lower in the previous session.

Markets remains cautious ahead of the US Federal Reserve monetary policy decision. US Treasury yields, in the meantime, ticked higher. While the Fed has clearly shown readiness to stay flexible with the inflation target, traders will watch for the quarterly forecast for fresh impetus. 

Also, Japan’s trade numbers for August beat forecasts after Monday’s upbeat Industrial Production data, further supporting the Yen and weighing on the pair. 

Data released earlier today showed Japan’s August month Merchandise Trade Balance Total rose to ¥248.3 B versus ¥-37.5 B market consensus and ¥10.9 B (revised). Details of the report showed the Imports dropped below -18% YoY forecast to -20.8, whereas Exports recovered from -16.1% to -14.8% in the reported month.

Technical studies for the pair show scope for further downside. 50-DMA has been capping any recovery attempts in the pair and oscillator has now turned bearish. Further rising volatility as evidenced by widening Bollinger bands could drag the pair lower. Immediate support is seen at 105.16 (trendline). Breach below could see test of 104 levels.