Thursday, October 31, 2019

USD/JPY

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Fundamental Highlights

The Dollar was lifted after the Fed delivered a 25 bps rate cut in the third consecutive FOMC meeting, but this time it dropped its previous reference to act as appropriate to sustain the economic expansion, which is considered an indication for future cuts. However, the positive momentum fizzled out rather quickly after the Fed Chair Powell said that the Fed would need to see a significant move up in inflation before considering raising rates. Meanwhile, the downside also remained limited after the Bank of Japan held short-term interest rate target at -0.10% and 10-year Japanese Government Bond yield target around zero, keeping the Yen bulls on the defensive at least for the time being.

Technical Analysis

The Dollar-Yen broke below the rising channel signaling a deeper pullback on the pair. 108.50 is currently the target for the bears, however lack of any fundamental catalyst will likely limit further gains on the Yen. The Dollar bulls, however, need to break above 109 to regain possession.

Support: 108.50 / 108.25
Resistance: 108.75/ 108.95

Chart (H4)
USDJPY