USD/JPY Clings to 115.10 Hurdle Ahead of FOMC Rate-Hike

Talking Points:

USD/JPY Clings to 115.10 Hurdle Ahead of Fed Rate-Hike; Outlook Hinges on Interest Rate Dot-Plot.

EUR/USD Fails Again during 1.0680 Hurdle; Downside Targets in Focus Going Into Dutch Election.

DailyFX Table

USD/JPY Daily

USD/JPY Daily Chart

Chart – Created Using Trading View

  • USD/JPY appears to be creation another run during 115.10 (50% retracement) generally as a Federal Open Market Committee (FOMC) is widely approaching to broach a 25bp rate-hike on Wednesday, and a uninformed developments entrance out of a executive bank might worsen a bullish view surrounding a greenback as Chair Janet Yellen and Co. seem to be on march to exercise aloft borrowing-costs over a entrance months; however, another unsuccessful try to tighten above a topside jump raises a risk for a near-term pullback as a span continue to work within a downward trending channel carried over from December.

Fed Table

Source:FRB

  • With Fed Fund Futures still pricing a larger than 90% luck for a Mar rate-hike, a uninformed updates to a seductiveness rate dot-plot might heavily change a dollar-yen sell rate as marketplace participants sign a destiny trail of a Fed’s normalization cycle; comments endorsing a Jun rate-hike should fuel miscarry from a monthly low (111.69) amid a diverging paths for financial policy, though a bearish unfolding might unfoldfor a greenback should Fed officials prominence a some-more shoal trail for a fed supports rate.
  • With that said, a Bank of Japan (BoJ) is expected to keep a dovish tinge during a Mar 16 seductiveness rate preference and might keep a doorway open to serve embark on a easing-cycle as a executive bank struggles to grasp a 2% aim for inflation; marketplace participants might uncover a singular greeting to a BoJ as a executive bank sticks to a Quantitative/Qualitative Easing (QQE) module with Yield-Curve Control, though Governor Haruhiko Kuroda and Co. might come underneath vigour to boost a non-standard measures as a executive bank pledges to keep a 10-Year produce tighten to zero.
  • Broader opinion for USD/JPY stays constructive followed a unsuccessful attempts to mangle subsequent a Fibonacci overlie around 111.30 (50% retracement) to 111.60 (38.2% retracement), while a Relative Strength Index (RSI) preserves a bullish arrangement carried over from a prior year; need a tighten above a 115.10 (50% retracement) jump to open adult a subsequent topside area of seductiveness around 117.00 (38.2% retracement) to 116.10 (78.6% expansion) followed by 117.00 (23.6% retracement).

EUR/USD Daily

USD/JPY Clings to 115.10 Hurdle Ahead of FOMC Rate-Hike

Chart – Created Using Trading View

  • EUR/USD continues to give behind a allege from progressing this month, with a span during risk for serve waste as it outlines another unsuccessful try to tighten above a near-term jump around 1.0660 (50% expansion) to 1.0680 (78.6% expansion); broader opinion stays slanted to a downside as a European Central Bank (ECB) continues to pursue a easing-cycle and
  • The single-currency might face increasing sensitivity over a comings days with a Dutch election underway, while a U.K. edges closer to triggering Article 50 of a Lisbon Treaty; a geopolitical risks surrounding a euro-area might force President Mario Draghi and Co. to serve support a financial kinship as a ‘balance of risks to a mercantile opinion was seen as remaining on a downside.’
  • However, a ECB appears to be in no rush to serve enhance a change piece and a executive bank might try to buy some-more time during a subsequent process assembly on Apr 27 as a Governing Council stays on march to revoke a asset-purchases to EUR 60B/month; might see President Draghi and Co. boost their efforts to sentinel off a ‘taper tantrum’ as they onslaught to grasp their one and usually charge for cost stability.
  • Failure to tighten above 1.0660 (50% expansion) to 1.0680 (78.6% expansion) might coax a pierce behind towards a reduce end of a new range, with a initial downside aim entrance in around 1.0600 (23.6% expansion) followed by a Fibonacci overlie around 1.0470 (38.2% expansion) to 1.0500 (50% expansion).

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— Written by David Song, Currency Analyst

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