Fed Chair’s comments after US FOMC meeting in focus; USDJPY notes increased volatility【July 26, 2023】

Fundamental Analysis

• US FOMC meeting scheduled for early tomorrow, with focus on whether they will mention the possibility of an additional rate hike before the end of the year
• China hints at introducing policy easing measures in the real estate sector; strong buy orders for oil and AUD
• USDJPY slightly stronger due to positional adjustments, forming a range after falling below the rising channel

USDJPY Technical Analysis

The USDJPY is below the rising channel and the 24 moving averages, which confirms that the upside is heavy. Also, a strong resistance zone exists at JPY 141.10, so material is needed to move higher.

Although a 0.25% rate hike has been factored in by the FOMC, there are mixed judgements on the likelihood of additional rate hikes in the future. Depending on what Chairman Powell says after the FOMC’s policy rate announcement, the market is likely to move either upwards or downwards. Careful attention should be paid to position management.

Day Trading Strategy (Hourly)

With the U.S. FOMC meeting coming up, it is very difficult to indicate the trend direction. However, a strong resistance zone exists at JPY 141.10, and at the time of writing, the pair is below the pivot point at JPY 141.16, so we would be cautious about buying. In terms of direction, the pair is expected to decline gradually due to heavy upside.

Since there are few major resistance lines up to JPY 140.30, the decline may intensify if trading volume increases.
The RSI is also below 50, indicating a downtrend.
A break below JPY 140.75 could lead to a drop to around JPY 141.30 with stop loss involved.

Support and Resistance Lines

The resistance line to be considered in the future is as follows

141.16 JPY – Pivot point
140.30 JPY – Major support zone

Market Sentiment

USDJPY　Sell: 57% Buy: 43%

Today’s Important Economic Indicators

*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.