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James Hyerczyk

The Dollar/Yen is trading higher early Wednesday as investors position themselves ahead of the U.S. Federal Reserve’s interest rate and monetary policy decisions, due to be released at 19:00 GMT.

Although there is still uncertainty over whether the U.S. will impose fresh tariffs on Chinese imports on December 15, the price action in the Forex pair suggests investors now assume or anticipate that some form of phase one deal will be signed.

At 07:04 GMT, the USD/JPY is trading 108.736, down 0.007 or -0.01%.

According to CNBC, “The Fed is expected to conclude its December meeting at 19:00 GMT on Wednesday by signaling it remains on hold for the time being and is monitoring economic developments.”

A hawkish Fed could drive the USD/JPY sharply higher.


Daily Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of a closing price reversal top on December 2 at 109.728.

A trade through 108.280 will change the main trend to down. A move through 109.728 will signal a resumption of the uptrend.

On December 4, the USD/JPY formed a closing price reversal bottom at 108.430. This has temporarily stopped the selling, allowing the Forex pair to form a support base.

The main range is 106.485 to 109.728. Its retracement zone at 108.107 to 107.724 is key support.

The short-term range is 109.728 to 108.430. Its retracement zone at 109.079 to 109.232 is the next upside target. Trader reaction to this zone will determine whether the USD/JPY moves higher or lower over the near-term.


Daily Technical Forecast

Based on the early price action and the current price at 108.736, the direction of the USD/JPY the rest of the session on Wednesday will be determined by trader reaction to a downtrending Gann angle at 108.853 and an uptrending Gann angle at 108.718.

Bullish Scenario

A sustained move over 108.853 will indicate the presence of buyers. If this move creates enough upside momentum then look for a potential surge into the short-term retracement zone at 109.079 to 109.232.

Bearish Scenario

A sustained move under 108.718 will signal the presence of sellers. This move could trigger a break into the next uptrending Gann angle at 108.499, followed by the reversal bottom at 108.430 and the main bottom at 108.280.

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