The last 2 trading days has seen the price of USDJPY dip below its 100 hour moving average (blue line). A total of 6 hourly bars dipped below the line with one close below that MA line materially (there may have been another or two that closed below by a pip or two).
The price low in the late London session today, also moved below the 100 hour MA, but once again could not find increased downside momentum on the break. The price reestablished support at the line and the price moved back higher (modestly).
Needless to say, there is a reluctance to move to the downside ahead of a Fed that is expected to raise rates by 75 basis points later today. Also, the BOJ today did say that they would continue to buy unlimited amounts of 10 year JGBs at 0.25% as they continue their yield curve control agenda. The disparity between central bank policy has been a main driver for the surge in the USDJPY.
On the other side, BOJ's Kuroda has recently addressed the weaker yen saying the "recent sharp fall in the Yen is undesirable" (see post here). That raises the possibility of intervention at some point, but it seems more of a jawboning exercise at the moment.
Technically,
- Getting and staying below the 100 hour moving average will be step 1 for a small victory for sellers.
- Step 2 would be to get and stay below the 200 hour moving average at 133.37. The price has not moved below the 200 hour moving average since May 30. That 200 hour moving average is near the swing low from Friday's trade.
- Below that the Thursday low at 133.175 and the Tuesday high at 132.978 are other targets.
- Move below that level and the 38.2% retracement of the move up from the May 24 low comes in at 132.052.
All those levels are targets/steps to the downside that would need to be busted to give the sellers some increased confidence. Absent that, and the price make correct the recent gains, but the buyers remain still in firm control.
The sellers have to prove they can take control. Ticking below the 100 hour moving average will not do it, but it nevertheless provides a level to eye for bearish clues.
On the topside, the high price from Monday at 135.185 followed by the high price today at 135.577 the next targets to the upside. The swing high going back to 2002 peaked at 135.16, near the high from Mondays trade. Getting above that level - and stay above through the FOMC decision - would increase the bullish bias that much more. Admittedly the first attempt failed today, but once again the sellers are not able to capitalize yet on that failure.