USD/JPY Awaiting the FOMC Risk for a Breakout

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USD/JPY Awaiting the FOMC Risk for a Breakout

In October, USD/JPY has been on a rollercoaster ride. It fell from the 2014-high around 110 down to 105.19. Since then it has rallied back and shifted the mode back to neutral-bullish. It is now consolidating again ahead of the FOMC event risk. Let’s take a look at the breakout scenarios.

A break above 108.40 represents a bullish continuation scenario. If this occurs after the FOMC does what is expected – completely remove QE, and keep the similar tone for forward guidance, then we should expect some pullback. However, staying above 108.00 would maintain the bullish outlook toward 110. If USD/JPY instead falls below 107.60 it starts the bearish continuation process, which would strengthen with a break below 107.40. If we get a pullback, see if the 107.50-60 area can now turn into resistance. If so, the USD/JPY is heading back down towards the 105.19 low on the month with risk of further downside.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.