The dollar selloff that was precipitated by the FOMC press conference on Wednesday, continued into the last trading day of the week. It was indeed the much-needed catalyst for our well-anticipated move on the USDJPY. Let’s look at our USDJPY Weekly Technical Outlook and trade ideas for the upcoming week
18 March, AtoZForex –This past week, the Fed did raise a highly priced in interest rates by 25bp. The greenback, however, tumbled against all major currencies. This was partly due to the fact that investors were disappointed that Fed Chair Janet Yellen did not suggest that the next hike would be in June. Moreso, the dot plot forecast showed U.S. policymakers looking for 2 and not 3 more rounds of tightening this year. Additionally, it was not a majority decision as Fed President Kashkari voted to keep interest rates steady. The market expressed their disappointment at the lack of overwhelming hawkishness by selling U.S. dollars.
However, the Fed is still the only major central bank planning to raise interest rates further this year. Going forward, if the data reports from the U.S keeps impressing, then we could be looking forward to rate hikes rhetorics making case for June hikes instead of September.
USDJPY Weekly Technical Outlook and trade ideas
USDJPY Hourly Technical Analysis
Looking through the 4 hourly frame, we can clearly see a fractal model formation. This fractal model called the top in USDJPY just before the FOMC meeting. Please refer to our piece Pre FOMC USDJPY Technical Outlook. This fractal model has its target at the bottom of the range around the 111.70 region. Once this level is printed, two scenarios are expected, we either break through to aim at the ultimate targets of 108.50 or we can have price rotate back up to correct the weakness seen so far. Either way, we have a map that will have us guided in days/weeks ahead. For those fast fingers who read our previous article and acted on it Pre FOMC, our targets remain the 111.70 level. Once printed, we shall step aside and wait for price reaction around the key support zone.
What is your view on USDJPY Weekly Technical Outlook and trade ideas? Please share your view in the comments section below.