Forex Video Briefing (10/29) – USD/JPY Awaits Range Breakout

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[videojs mp4=”http://s3.amazonaws.com/fxcom-amazon-s3/2014/10/AwaitingtheFOMCRisk1.mp4″]
Forex Video Briefing (10/29) – USD/JPY Awaits Range Breakout

Let’s assess the USD/JPY’s current consolidation range to get ready for a breakout after the FOMC event risk.

1) The USD/JPY might break above 108.40. This would signal a bullish outlook toward 110, though there might be some near-term resistance around 108.70. Now, if the bullish reaction follows a Fed decision to completely taper QE, without any change to forward guidance, it would be in-line with expectations, so we should be prepared for a pullback. As long as price can hold above 108.00 USD/JPY should still be in a bullish attempt toward 110.00. It is very unlikely that the Fed will move the rate hike earlier than mid-2015, but if it does, a rally toward 110 could be in a hurry with no pullback.

2) If the USD/JPY breaks below 107.60, it would clear below the latest rising trendline and would break below a recent support pivot, putting in a price top. A little lower, below 107.40, and price would be below the cluster of moving averages in the 4H chart. This opens up the support resistance pivot area just below 106.50. If price starts then fails to climb back above 107.50-60 area, the USD/JPY will remain pressured toward the 105.19 low with risk of further downside.