USDJPY Forex Forecast – FOMC Correction Play

USDJPY Forex Forecast - FOMC Correction Play
USDJPY Forex Forecast - FOMC Correction PlayUSDJPY previously broke below a consolidation pattern visible on its 4-hour time frame then dipped to a low of 120.30 before showing signs of a retracement. Using the Fibonacci retracement tool on the latest swing high and low shows that the broken support lines up with the 61.8% Fib.
This also coincides with the 122.50 minor psychological mark and the moving averages, which usually hold as dynamic inflection points. The 100 SMA appears to be crossing below the longer-term 200 SMA already so the path of least resistance is to the downside.
Stochastic is already indicating overbought conditions so buyers might need to take a break and let sellers take over. Meanwhile, RSI is still making its way up so there may be a bit of buying pressure left before the oscillator reaches the overbought zone.

USDJPY Fundamental Factors

Fed policymakers decided to hike interest rates as expected to 0.50% while at the same time upgrading growth and employment estimates for 2016. Fed head Yellen expressed confidence in US fundamentals during her press conference and didn’t sound too cautious.
Now that the FOMC statement has already played out, market watchers can turn their attention to the BOJ monetary policy statement on Friday. No actual changes are expected but the yen could react to any potential changes in rhetoric.
Data from Japan has been coming in line with expectations recently so it’s likely that the BOJ would retain their optimistic stance. Still, any hint of dovishness could be bearish for the yen and possibly allow USDJPY to break past the Fib levels.
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