USD/JPY seesaws around 109.60 ahead of FOMC
- USD/JPY recovers of two-straight day losses eye 110.00 ahead of the FOMC
- Market sentiment is upbeat on good news related to Evergrande.
- Investors await the outcome of the FOMC monetary policy meeting.
After posting losses for two days in a row, the USD/JPY staged a recovery of 0.34%, is trading at 109.60 at the time of writing.
The market sentiment is upbeat, mainly influenced by Chinese news. Evergrande Group real-estate developer in China said that it would make a coupon payment on bond interest due on Thursday. Furthermore, sources close to the Government said that a deal would see the company restructured into three separate entities, according to wires. The deal could be announced in the following days.
Market’s attention turns to the FOMC meeting
The Federal Open Market Committee will unveil its monetary policy statement. Investors expect that the Fed will delay the bond tapering announcement until the next meeting. However, they would like to see how the process will unfold. Moreover, the Summary of Economic Projections (SEP) update will see 2024 added to it. Additionally, at 18:30 GMT, the Fed’s Chairman Jerome Powell will hold its press conference to read the monetary policy statement, followed by the Q&A session.
USD/JPY Price Forecast: Technical outlook
The USD/JPY is trading near the September 21 high, around 109.60. The 50 and the 100-day moving averages (DMA’s) lie nearby 109.82, acting as first resistance. A break of the latter would expose crucial resistance levels like the September 17 high at 110.07 and the September 8 high at 110.44.
On the flip side, failure at 109.82 could pave the way for further downside pressure. The first support would be 109.00. In case of a clear break of that level, the following demand zones would be the August 4 low at 108.71, followed by May 7 low at 108.33.
The Relative Strength Index is at 47, aiming higher, suggesting upside bias, though caution is warranted as it remains below the 50-midline.
KEY TECHNICAL LEVELS TO WATCH