USD/JPY Price Forecast – US Dollar Testing Major Support Ahead of The FOMCThe US dollar has gone back and forth on Wednesday, as we continue to dance around the ¥105 level. This is a market that is testing a major level.
The US dollar has gone back and forth during the trading session on Wednesday as we await the FOMC statement, now at this point in time the ¥105 level seems to be holding. However, if we break down significantly below the ¥105 level, this could get rather ugly. At that point I would anticipate a move down to the ¥102 level, possibly even the ¥100 level. At that point, the Bank of Japan is very likely to get involved and probably start to jawbone the markets if not intervene. However, we have a long way to go before we get there, so I am looking to sell rallies as they occur.
USD/JPY Video 30.07.20
To the upside, the ¥107 level is likely to continue to offer significant resistance, assuming we can even get there. The last three or four sessions have really started to wear upon the US dollar, not only here but against many other currencies. Gold is breaking out, and just about anything else priced in US dollars. This is essentially a significant “anti-US dollar” move. This is because the Federal Reserve is flooding the markets with liquidity, and that will continue to be the case.
After the FOMC meeting and press conference you can be assured that the market will also be assured that the Federal Reserve is going nowhere and if anything will be more aggressive, perhaps even putting more liquidity into the market. The Federal Reserve is essentially stuck with the monster that it has created, so interest rates in the United States are going to be low for the foreseeable future.
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