The USDJPY keeps positive tone on Wednesday after bounce by nearly 0.9% on Tuesday revived bulls and generated initial signal of formation of reversal pattern on daily chart, with the notion being supported by strong downside rejection at daily cloud base and a bear-trap at Fibo support at 131.30 (61.8% of 127.22/137.90).
Fresh advance cracks the key barrier at 132.70 (top of daily Ichimoku cloud), but requires firm break here to signal further gains, with violation of next pivot at 133.35 (Fibo 38.2% of 137.90130.53, reinforced by falling 10DMA) to boost bullish signals and confirm reversal.
Daily studies are still mixed (most of moving averages are in bearish configuration and negative momentum is rising, while RSI and stochastic are heading north) lacking clearer near-term direction signal, with focus turning towards Fed.
The FOMC will announce its policy decision later today, following a two-day meeting, with two scenarios being on the table.
Markets expect 25 basis points hike, which will push interest rate to 4.75%/5.00% range and keep the dollar supported, though the situation of increased banking stress may prompt Fed to pause hikes this time, in order not to deepen developing crisis.
If the US central bank surprises by staying on hold in March, the dollar would come under pressure, while fresh bulls are likely to remain in play if Fed delivers widely expected 25 basis points, though markets will also closely watch the signals about Fed’s action in the near future.
Res: 132.92; 133.35; 133.76; 134.22.
Sup: 132.70; 132.27; 131.55; 131.06.
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