Today’s focus is on FOMC meeting and that is the reason why the market has been calm all day long. We should expect FED to focus on China slowdown, market volatility and weak US data. At the present FED could probably take a pass on policy and mention “patience”. There are 2 possible scenarios: Hawkish scenario would be mentioning another rate hike soon (March) and if the FED skips any mention of raising rate hikes and takes on weak US data in the statement addressing both global and GDP slowdown, the statement will be considered dovish. The statement will come in the written form at 19:00 GMT.
Technically the pair is ranging with slightly bullish bias so we need to pay attention to important levels. 118.65-80 is POC (H3, 88.6, historical sellers) and on dovish statement the pair should drop towards 118.00 and 117.40 L5 intraday support. Currently the price shows a combined V shaped reversal and inverted Head and Shoulders in progress that could spike the price up towards POC sell zone.
However if the price breaks and closes above 119.00 (slightly above historical sellers and H4) it might spike up to 119.40 where it will face resistance. MACD is flat providing us with additional confirmation that market is in waiting mode so pay attention to increased volatility just before,during and after the statement has been publicly released.
USDJPY Hourly Chart