USD/JPY Forecast – US Dollar Rallied Slightly Ahead of FOMC

Christopher Lewis
Updated: Mar 22, 2023, 14:52 GMT+00:00

The US dollar has rallied slightly against the Japanese yen during the early hours on Wednesday as the market awaits the FOMC decision.

US Dollar, FX Empire

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USD/JPY Forecast Video for 23.03.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied slightly during the trading session on Wednesday to show signs of life again, as we await the Federal Reserve rate decision. Ultimately, this comes down to whether or not the market starts to look at the Federal Reserve as slowing down or continuing its big tightening moves. At the end of the day, the market will more likely than not be very noisy and pay close attention to the bond markets around the world.

Speaking of the bond markets, keep in mind that the Bank of Japan continues to fight its yield curve control battle, with the idea that the Bank of Japan will be forced to buy unlimited bonds in order to keep the 10 JGB down to 50 basis points or less, which also involves printing yen. That’s exactly what happened last year, so that is going to continue to be a bit of a moving target. This will be especially true if rates spike after the Federal Reserve decision because it will more likely than not have a knock on effect around the world, including Japan.

The 50-Day EMA and the 200-Day EMA sits just below the ¥134 level. They are both very flat, so it does suggest that we are more or less looking for some type of range at this point. Just above there, we have the ¥135 level, which I think is much more structurally resistance. Underneath there, we have the ¥130 level which of course is a significant support based upon previous action.

Remember that the market had bounced from the crucial 50% Fibonacci level from the big move last year, forming a double bottom in that region, extensively the ¥128 level. Regardless, this is a market that will more likely than not be very noisy, and therefore very choppy. It’ll be difficult to get too big with the position, but we may have a bit more clarity after the press conference late on Wednesday. Until then, the market is probably going to be very choppy, trying to figure out how to front run the situation after the market announcements.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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