Yesterday, the USDJPY was on a wild roller coaster ride as the peaks and valleys from the Russian ruble turmoil and stock market anxiety sent flows into and out of the relative safety of the yen. At the end of the day, the price moved over 220 pips to the downside, recovered 220 pips to the upside, before falling 150 pips into the close.

The hourly USDJPY chart.

The hourly USDJPY chart.

Today, the price has recovered as stocks steadied as did the ruble. The upside has found the underside of an old trend line and the 50% of the move down from last Thursday’s high as levels to define and limit risk (at 117.56 area). This will be a “line in the sand” for me through the Fed statement this afternoon. Move above, and I will look for the buyers to leave the lower half of the last move in the rear view mirror. We should see a move to the upside.

Other targets on the topside from the hourly chart include the 100 hour MA (at 117.95 currently – see blue line in the chart above). The 118.698 is the 50% of the move down from the December and year high and then the 200 hour MA at the 118.92 (green line in the chart above). A further move above the 200 hour MA will look toward the other high levels from last weeks trading.

On a downside, the move into the close yesterday, stalled at the 116.24 level (see hourly chart above). The key level for the bears, however, will be the 115.475 level. This is the 38.2% of the move up from the October 2014 low to the December high (see daily chart below). Yesterday, the price low came in at 115.55 as early buyers leaned against the level. If the price breaks below this level in trading today, look for further downside momentum with medium-term target support looking toward the 113.512 level. This is the 50% retracement of the same move higher (see chart below).

USDJPY daily chart

USDJPY daily chart

What will make the USDJPY more tricky through the decision is the reaction from the stock market. On a more dovish Fed, stocks could see a run-up and this might lead to a move higher in the dollar and the USDJPY pair as a result of the exiting of the flight to safety trades. Conversely, a more hawkish Fed could send stocks lower and lead to a flight into the relative safety of the pair. In which case, the price of the USDJPY may head lower. So be aware that there may be some volatile swings post the FOMC decision. Plan accordingly (in other words, let the dust settle before jumping in).