The US dollar has fallen lower against the Japanese yen currency after the release of the FOMC, which hints that more danger lays ahead for the USDJPY pair.
It is possible we could see further declines ahead of the Fed meeting However, if this comes to past we could see the USDJPY pair touching the 142.00 at a very minimum.
Recently, the USDJPY pair held its ground despite intervention talk continuing. Yen pairs have seen a slight lull of late with USDJPY in particular feeling the effects of a potential intervention while trading at a key area of resistance.
The Yen this morning has started the day with more strength, which could be due to the heightened threat of intervention from the Japanese yen and slight fears over the chances of a recession coming.
The key thing to watch this week is that the trend remains short-term bullish while the price trades above the 142.00 level. However, a move under 142.00 could set up a test of the 138.00.
According to the ActivTrader Market Sentiment tool, some 64% of traders are bullish towards the USDJPY pair and the other 36% are bearish, which strongly hints that we could see more downside.
With retail traders or participants are very bullish thus the chances of a price correction to 142.00 or even to 138.00 are dramatically increased.
USDJPY Short-Term Technical Analysis
Technical analysis on the four-hour time frame shows that the USDJPY pair continues to hold inside the Ichimoku Cloud and is short-term bearish below its lagging and base line.
According to Ichimoku analysis, the bottom of the cloud is found around the 143.00 level. A move under the cloud should be considered extremely bearish for the USDJPY pair, and 142.00 is likely.
USDJPY Medium-Term Technical Analysis
The daily time frame is showing that the USDJPY pair is trading above support and is inside a large rising price channel style pattern.
According to Ichimoku analysis the price is working its way towards higher while trading above the 142.00 level. Better to wait for a trend change or continuation is we test and hold the 142.00 level.
If the price holds I would expect 146.00, and if not then we should see a drop towards the 138.00 price level.