USD/JPY Bearish Sequence Remains Intact Ahead of FOMC Meeting

FX TALKING POINTS:

USD/JPY Remains Under Pressure Despite Above-Forecast U. of Michigan Confidence Survey. Bearish Sequence Remains Intact Ahead of Federal Open Market Committee (FOMC) Meeting.

NZD/USD Rebound Unravels Ahead of Last Meeting with Governor Grant Spencer. Reserve Bank of New Zealand (RBNZ) to Endorse Wait-and-See Approach.

DailyFX Table

USD/JPY BEARISH SEQUENCE REMAINS INTACT AHEAD OF FEDERAL OPEN MARKET COMMITTEE (FOMC) MEETING

USD/JPY Table

USD/JPY stays underneath vigour even as a U. of Michigan Confidence consult suddenly climbs to 102.0 from 99.7 in February, and a near-term miscarry might continue to uncover forward of a Federal Open Market Committee (FOMC) assembly as a span extends a bearish method from progressing this week.

Fed Funds Forecast

Even yet a FOMC is widely approaching to lift a benchmark seductiveness rate on Mar 21, a updated forecasts from Chairman Jerome Powell and Co. is approaching to change a near-term opinion for a U.S. dollar as a executive bank pledges to serve normalize financial process over a entrance months. The FOMC might broach a hawkish rate-hike as a ongoing improvements in labor marketplace dynamics are approaching to boost salary growth, and a initial press contention with Chairman Powell might worsen a seductiveness of a dollar if a executive bank conduct shows a incomparable eagerness to exercise a some-more assertive hiking-cycle.

At a same time, projections for 3 rate-hikes in 2018 might do small to worsen a seductiveness of a greenback as officials see a neutral Fed Funds rate of around 2.75% to 3.00%, and some-more of a same from executive bank might eventually fuel a new decrease in USD/JPY as it undermines bets for 4 rate-hikes in 2018. With that said, a monthly-low (105.25) stays on a radar following a unsuccessful try to tighten above a 106.70 (38.2% retracement) to 107.20 (61.8% retracement) region, with a span during risk for serve waste as it continues to carve a array of reduce highs lows.

USD/JPY DAILY CHART

USD/JPY Daily Chart

  • May see USD/JPY exam a 2018-low (105.25) as it preserves a bearish method from progressing this week, though need a break/close subsequent a 105.40 (50% retracement) to pierce a downside targets on a radar, with a subsequent segment of seductiveness entrance in around 104.10 (78.6% retracement) to 104.20 (61.8% retracement).
  • Keeping a tighten eye on a Relative Strength Index (RSI) as it fails to peep a bearish trigger forward of a FOMC meeting, with a oscillator warning of range-bound conditions as it binds above trendline support.

NZD/USD REBOUND UNRAVELS AHEAD OF LAST MEETING WITH RESERVE BANK OF NEW ZEALAND (RBNZ) GOVERNOR GRANT SPENCER

NZD/USD Table

The near-term miscarry in NZD/USD appears to have stalled forward of a February-high (0.7437) as a span fills a opening from progressing this week, and new cost movement raises a risk for a serve decrease in a kiwi-dollar sell rate as it carves a uninformed array of reduce highs lows.

Keep in mind, a Reserve Bank of New Zealand (RBNZ) also convenes subsequent week, with a executive bank widely approaching to keep a record-low money rate during a final assembly with acting-Governor Grant Spencer. More of a same from a RBNZ might fuel a new debility in a New Zealand dollar as marketplace participants scale behind bets for a rate-hike in 2018, and a executive bank might continue to tame expectations for a aloft borrowing-costs as ‘GDP enlargement eased over a second half of 2017.’

Slower enlargement interconnected with signs of singular acceleration might pull incoming-Governing Adrian Orr to adopt a identical approach, with a New Zealand dollar during risk of confronting a some-more bearish predestine over a entrance days as a allege from a March-low (0.7186) unravels.

NZD/USD DAILY CHART

NZD/USD Daily Chart

  • Failure to break/close above a 0.7330 (38.2% retracement) to 0.7380 (23.6% retracement) jump might coax a incomparable pullback in NZD/USD generally as a span carves a uninformed array of reduce highs lows, while a Relative Strength Index (RSI) extends a bearish method from progressing this year.
  • A tighten subsequent a 0.7240 (61.8% retracement) to 0.7260 (38.2% retracement) segment raises a risk for a pierce behind towards 0.7170 (50% retracement) to 0.7200 (38.2% retracement), that lines adult with a monthly-low (0.7186), with a subsequent downside segment of seductiveness entrance in around 0.7040 (50% retracement) to 0.7100 (38.2% expansion).

Interested in carrying a broader contention on stream marketplace themes? Sign adult and join DailyFX Currency Analyst David Song LIVE for an event to plead intensity trade setups!

DailyFX Calendar

Additional Trading Resources

Are we looking to urge your trade approach? Review a ‘Traits of a Successful Trader’ array on how to effectively use precedence along with other best practices that any merchant can follow.

Want to know what other banking pairs a DailyFX group is watching? Download and examination a Top Trading Opportunities for 2018.

— Written by David Song, Currency Analyst

To hit David, e-mail dsong@dailyfx.com. Follow me on Twitter during @DavidJSong.

To be combined to David’s e-mail placement list, greatfully follow this link.

About author