Potential signal:
- I am buying this pair on a break above the 159 level with a stop loss at 157.8, and a target of 161.
- The U.S. dollar continues to see a bit of bullish pressure as we head into the Fed decision, as we continue to get paid holding longs here.
USD/JPY
The U.S. dollar initially fell during the trading session on Wednesday during the Asian session as the world waits for the next FOMC decision this afternoon. It does make a certain amount of sense that perhaps Asian traders got these positions off of their books. After all, they do not really have an opportunity to react to it in the way that an American trader might. With that being said, it is not a surprise that we started out the day on the wrong foot, but we fell toward the 200-day EMA and then bounced.
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At this point in time, it looks like we are trying to do everything we can to get to the ¥159 level, an area that has been significant resistance. When you look back over the last month or so, we have been bouncing around between the ¥156.50 level and the ¥159 level.
I think at the end of this press conference, we may have the answers that we're looking for as far as how hawkish the Federal Reserve is going to be. But I would also throw in there that Friday morning, tentatively, we get a Bank of Japan interest rate decision. While they are not expected to do anything either, they may say something to upset the markets. You just never know.
I am still bullish
I look at this as a market that is remaining very much a buy-the-dip market, and you do get paid at the end of every day. What I am hoping for is a little bit of a pullback toward the ¥157.50 level, maybe even ¥157, that I can take advantage of and start buying cheap dollars.
On a move above ¥159, I am also bullish. I think we will probably threaten ¥160 at that point. Breaking above there could open up the floodgates. I do think, ultimately, the U.S. dollar continues to strengthen against the Japanese yen.
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