The US dollar has gone back and forth against the Japanese yen for several days now, leading up to the Federal Reserve Statement. That being the case, the market looks as if it is trying to figure out where to go next, and if the statement is dovish enough, we could see this pair rally as the risk appetite should push the market higher. However, if the Federal Reserve is a bit more hawkish, or at least not dovish enough, that could send this market back down towards the ¥180 level.
USD/JPY Video 20.06.19
Overall, the best way to trade this market is to simply pay attention to the range that we are in and recognize that a breakout of that range tells us which direction we should go. That being the case, it’s very likely that the daily close will be crucial. If we can break above the ¥108.75 level on the daily close, then this pair should continue to go much higher, at least towards the ¥109.60 level. Alternately, if we break down below the ¥107.75 level, it would wipe out the 61.8% Fibonacci retracement level and open the door to the ¥105 level. Overall, this is a market that is simply waiting to see what the Federal Reserve is going to do and won’t react until we get that announcement. Be aware that the initial few moments after the announcement will be driven by headline reading algorithms, meaning that it will be extraordinarily volatile to say the least. This is why waiting for the daily close can be crucial.
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This article was originally posted on FX Empire
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