Yesterday, the USDJPY experienced an upward movement, supported by rising yields, and managed to surpass the 100-hour moving average (blue line in the chart) by the close. However, it fell short of reaching the swing area between 132.64 and 132.738, with the high price peaking at 132.626. The day ended with a price of 132.44.
During today's Asian trading session, the USDJPY briefly dipped below the 100-hour moving average twice, but the downward momentum was limited. The currency pair found support at the 100-hour moving average and moved higher during the European morning session. The high price climbed above the previously mentioned swing area, reaching 132.994, just shy of the natural resistance at 133.00. Early sellers emerged against the falling 200-hour moving average (green line in the chart), which the price last traded above on March 10 when the moving average stood at 136.248. The low price touched 130.53 just six trading days later.
As the FOMC rate decision approaches, the USDJPY has experienced a corrective move higher following the sharp decline. Rising interest rates have also contributed to this movement. The two-year yield is back at 4.252% after trading as low as 3.637% just two days ago. The 10 year yield is trading at 3.623% after trading as low as 3.291% last week.
The price moving back between the 100 and 200 hour moving averages is a logical landing spot ahead of the rate decision (it's just more neutral). Traders will use those moving average as short-term barometers. A move above the 200 hour moving average would target the 38.2% retracement at 133.348 followed by the the swing high from last Wednesday's trade at 133.82. Above that and the 50% midpoint of the March trading range at 134.218 would be targeted.
On the downside, moving below the 100 hour moving average of 132.264, will have traders looking toward the recent swing lows and highs between 131.55 and 131.84. Below that and we move toward the extremes including the low last week at 130.53 (the low for Friday's trade).
PS Taking a broader look at the daily chart, the low price from last Friday reached near swing lows from August 2022 and December 2022 between 130.38 and 130.55. The low price reached 130.53 and bounced. Getting below that area should increase the bearish bias.
