- The USD/JPY pair rallied firmly ahead of the Federal Reserve’s rate decision, with traders watching both the expected cut and the press-conference guidance.
- A break above ¥158 could open a move toward ¥160, while dips remain favored for buying.
The US dollar has rallied quite nicely during the trading session on Tuesday, as it looks like we are ready to continue going higher. That being said, though, you have to understand that the Federal Reserve has an interest rate decision on Wednesday, which will have a major influence on this pair. Ultimately, keep in mind that although an interest rate cut is expected, a lot of what people will be paying attention to is the press conference and what the Federal Reserve is likely to do going forward.
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With this being the case, it's possible that the market could go looking to the 158 yen level, breaking above there, then opening up the possibility of a much bigger move. But as things stand right now, I think you have to understand that Wednesday will be pretty messy, but once we get above that 158 yen level, and maybe it happens Wednesday, I don't think it will happen right away, but it could. Then we're looking at 160 yen before it's all said and done.
I have no interest whatsoever in shorting this pair, and I look at dips as potential buying opportunities, but I also recognize that you have to be somewhat cautious here because of the volatility. You don't want to get taken out of the market as machines are reacting to the interest rate decision or the statement.
All things being equal, as long as we don't break down below the low price of Friday, I think the uptrend is very much intact and would even extend that maybe as low as 153 yen. Anything above there, it's still got a shot to go higher. And I think ultimately if we can get above 158, to the 160 yen level, this thing could really take off. We'll just have to wait and see what Jerome Powell has to say.
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