Initial range remains intact after BoJ; Fed eyed for stronger signals
The pair spiked to one-week high at 111.46 after BoJ decision, but gains were so far short-lived and capped by sideways-moving 20SMA, reinforced by formation of bear-cross with falling 10SMA, keeping week-long congestion intact.
The Bank of Japan made little changes to the policy on today’s meeting, disappointing many who expected more drastic action.
The central bank kept interest rate unchanged as expected and kept its massive stimulus program, required by stubbornly low inflation, but will look for changes in the policies on other parts of the economy, to reduce cost of prolonged delay in starting to tighten the policy.
Overall little change done by the central bank against the expectations for more significant steps, made minimum impact to the USDJPY pair.
Initial range between 110.58 (55SMA) and 111.50 (converged 10/20SMA’s) remains intact and break of either boundary would provide firmer direction signal.
Mixed daily techs (strongly bearish momentum; bullish slow stochastic; mixed setup of MA’s and neutral RSI), lack signals and turning focus towards tomorrow’s FOMC verdict, which is expected to spark stronger action.
Break and close above upper pivots at 111.50/57 (20SMA / Fibo 38.2% of 113.17/110.58 pullback) would activate bullish scenario for recovery extension towards Fibo barriers at 111.88 (50%) and 112.18 (61.8%), with break above the latter to confirm higher low at 110.58.
Bearish scenario requires close below 55SMA to generate bearish signal for test of key supports at 110.00 zone (200SMA / Fibo 61.8% of 108.11/113.17 rally / daily cloud top) violation of which would be strong bearish signal.
Res: 111.50; 111.57; 111.88; 112.18
Sup: 110.73; 110.58; 110.06; 109.90