Not much going on into the decision
The USDJPY is consolidating between a neutral area as traders prepare for the FOMC decision at 2 PM ET. The Fed is largely expected to tighten. What they say and how they say it? What they project? What is priced in or not prices in? Those are the things that will lead to a price move one way or the other.
If there is "a little of this, a little of that" don't expect a trending market.
If Yellen (the Fed) are more hawkish (Yellen tends to default to dovish. If she gets tougher it could get the dollar moving higher), the USDJPY should move up.
If Yellen (the Fed) keeps her dovish tendencies, the USDJPY may look to correct more to the downside. How far the price goes will depend on the price action and the technical tools.
Keeping things simple, the hourly chart has a defined neutral area right now of about 50 pips. That neutral area is between 114.48 and 114.96. Let's widen that out to 114.50 to 115.00 (yellow area in the chart above).
At the low of the neutral area sits the 200 hour MA and a series of lows (red circled numbers).
At the high of the neutral area sits a trend line off recent highs and a series of swing highs (green circled numbers).
If the "stuff" is a "little of this, and a little of that" the price may slow-play that range up and down. We may wander above. We may wander below. That will turn the bias more bullish or bearish but traders may break and reverse too. So be aware.
If Yellen/Fed is more hawkish, look for the break of the 114.96-115.00 to get above that area and stay above. Let's add the 200 hour MA at 114.86 as a risk defining level if the 114.96!115.00 is broken (and they are more hawkish). The price should not go back below that area.
What are the other targets on a break higher?
- 115.16 is the high from yesterday.
- 115.50-60 is the high from US employment day.
- 115.955 is the 61.8% of the move down from the December high (see daily chart below)
- 116.09 is a swing level (see daily chart).
A move above the 116.09 opens the door for potentially/eventually a retest of the Dec/Jan highs at 118.50-65 area (see daily chart below).
If Yellen/Fed is more dovish, look for the market to take back some of the move higher that we have seen in March. More specifically, the levels include:
- 114.15. See the blue circled numbers
- 114.04. 38.2% of the move up from the Feb 28th low
- 113.82. 100 bar MA on the 4-hour chart
- 113.52-59. 200 bar MA on 4-hour chart, swing lows, 50% retracement. This is a KEY CLUSTER OF SUPPORT.
- 113.139 is the 61.8% retracement
- 112.909 is the 100 day MA
A move below the 100 day MA would look toward the Feb lows which bottomed at 111.583 (see daily chart below)
We are in a neutral area now. The market is waiting and will react depending on what "stuff" comes out and what the market has already priced in. We will see, but there are some pretty straightforward technical levels that will define the steps on more hawkish of more dovish.