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    IronFX Intraday Comment | USD/JPY | 27/01/2016

    • The dollar traded mixed against its major counterparts during the European morning Wednesday, in the absence of any major market moving events. It was higher against GBP and NOK in that order, while it traded lower vs AUD, NZD and SEK. The greenback remained virtually unchanged against EUR, CAD, JPY and CHF.

    • Just few hours ahead of the FOMC rate decision, the markets seem to be nervous and the trading activity appears to be quiet going into the meeting. Nevertheless, it could become more volatile over the event. The Fed is expected to remain on hold at this meeting and all the action will come from the statement accompanying the decision, since no press conference is scheduled and we don’t receive any updated economic projections. We don’t expect Fed officials today to lock themselves for a rate hike in March, as they will probably prefer to keep their options open and wait for the updated data to determine the actual path of the Fed funds rate. The dollar’s reaction will be highly dependent on the signaled path of future policy and on the tone of the statement. A reinsertion of the sentence that disappeared in the October statement warning about the recent global developments, could give the bears an excuse to push the greenback lower, at least temporarily.

    • USD/JPY traded lower during the European morning Wednesday after it hit resistance slightly below the 118.80 (R1) resistance obstacle. Although the pair printed a higher low at 117.65 (S1) yesterday, I would like to see a decisive move above 118.80 (R1) before assuming more bullish extensions. For now, I see the possibility for the bears to continue driving the battle lower, perhaps to test once again the 117.65 (S1) support line. A dip below that line could shift the intraday outlook mildly to the downside and could open the way for the next support at 116.60 (S2). Our short-term oscillators support that the pair could continue lower for a while. The RSI is in a sliding mode and now looks able to dip below its 50 line, while the MACD, although positive, stands below its trigger line and points south. Also, both indicators lie below their respective downside resistance lines. Switching to the daily chart, I see that the medium-term picture stays cautiously negative. As a result, I would consider the recovery that started on the 20th of January as a corrective move at the moment.

    • Support: 117.65 (S1), 116.60 (S2), 116.00 (S3)

    • Resistance: 118.80 (R1), 119.60 (R2), 120.00 (R3)

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