- USD subdued after FOMC decision overnight which was largely in line with market expectations.
- However lack of fresh insight on future hike rates combined with a dovish language in the statement knocked-off Treasury yields across the curve.
- USD saw a broad based sell-off overnight and is extending weakness today.
- A 'Morning Star' candlestick pattern formed on the daily charts had raised scope for upside.
- The pair broke above 200-DMA, but failed to sustain the break. Price action has dipped back into daily cloud.
- Upside is now being capped by 5-DMA at 111.25, bias lower. The pair finds strong support at 110.62, break below could see further weakness.
- Test of channel base at 109.30 then likely, bearish invalidation on close above 200-DMA.
Support levels - 110.62 (cloud base), 110, 109.30 (channel base)
Resistance levels - 111.26 (5-DMA), 111.25 (cloud top), 111.96 (200-DMA)
Call update: We had advised a short in our previous call (http://www.econotimes.com/FxWirePro-Possible-Death-Cross-on-USD-JPY-go-short-on-decisive-close-below-200-DMA-815003).
Recommendation: Hold for targets. Watch out for break below 110.62, target 109.30.
FxWirePro Currency Strength Index: FxWirePro's Hourly USD Spot Index was at -21.6568 (Neutral), while Hourly JPY Spot Index was at -23.9151 (Neutral) at 0600 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.
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