FxWirePro: USD/JPY extends weakness despite hawkish Fed, risk-off to aid further declines

USD/JPY chart on Trading View used for analysis

• USD/JPY is extending downside despite Fed delivering a hawkish rate decision overnight.
   
• The Fed raised interest rates by 25 basis points yesterday as expected, but signaled that it could hike rates two times in 2019.
   
• Despite the hawkish Fed, the 10-year yield remains near the seven-month low of 2.76 percent.
   
• USD/JPY edged higher from session lows at 112.09 post Fed rate decision, but the bounce lacked follow-up and was short-lived.
   
• The major is trading 0.16% lower on the day at 112.28 at the time of writing.
   
• Price action largely muted to BoJ which left policy unchanged, as widely expected.
   
• The central bank also made no changes to the forward guidance, adopted in July that pledges to keep interest rates extremely low for an extended period.
   
• Technical indicators maintain their bearish strength. The pair has shown a breach at 'Symmetric Triangle' base raising scope for further downside.
   
• We see scope for test of 200-DMA at 110.85 on break below 23.6% Fib. Bearish invalidation only above 113.85 (Triangle top) 

Support levels - 112.20 (23.6% Fib), 111.37 (Oct 26 low), 110.88 (200-DMA), 110.76 (38.2% Fib)

Resistance levels - 112.69 (5-DMA), 113 (nearly converged 21-EMA and 50-DMA), 113.85 (Triangle top) 

Recommendation: Good to go short on break below 112 handle, SL: 112.70, TP: 111.40/ 111/ 110.90/ 110.75

For details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.