- The yen is again the best performing currency on Wednesday.
- The dollar remains weak after Tuesday’s inflation data and ahead of the Fed’s decision.
- USD/JPY on track to test December lows.
The USD/JPY extended the fall in the European session, given a general rise in the yen in the market. The pair fell to 134.47, the lowest level since December 5. It is trading below 135.00, with a negative tone ahead of the Federal Reserve’s decision.
The yen shines again
On Tuesday, the Japanese currency was among those that rose the most in the market, driven by inflation data from the United States, which showed a greater than expected slowdown. This pushed back Treasury yields as well, favoring the yen.
The focus is now on the Federal Reserve, which at 19:00 GMT will announce its monetary policy decision. A rise of 50 basis points is expected. The market will look for signals in the macroeconomic projections and in the words of Powell about the next steps and how far the central bank can go with the increases. What the Fed does is expected to have a major impact on USD/JPY.
Bloomberg reported Wednesday that officials at the bank of japan They see a policy review as possible next year, with the focus on wage growth and the possibility of a global slowdown, according to sources familiar with the matter.
Regarding data, the survey was known tankan of the fourth quarter that showed a drop from 8 in the sentiment index of large companies to 7, better than the 6 expected. Another report showed that industrial production fell 3.2% in October.
With an eye on the December floor
In case of losing 134.50 definitively, the next support in the USD/JPY appears at 134.10. Below is 133.90 and then the December low near 133.50.
If the day ends at current levels, USD/JPY would return below the 200-day moving average, confirming the bearish bias. The break zone for the dollar is 138.00, strong resistance reinforced by the 20-day moving average.
technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
