For the last couple of weeks you couldn't get a dip in USDJPY and now we're off over 200 pips in a few days

What a difference a few days make in the fickle world of forex. The dollar was stopping for no man recently but now it's the lame duck.

The switch from Fed trading to election trading has been stark but actually I still think it's a mixture of both. US yields stepped up a gear before the Dec 2015 hike and they've been doing the same again since the summer. Then the swing in election thinking became to much and we saw bonds sold off yesterday, and the general run to safety.

It all might just be some repositioning over the headlines or it could be the precursor to something bigger coming. What we do know is that the headline risk has increased tenfold and there's not a lot we can do about that.

For USDJPY, 103.00 is under fire and a break there targets the 200 H4 ma at 102.96, then the 100 dma at 102.85 and the 50.0 fib of the late Sep swing, which was also support early Oct. The 80/85's are usually a big figure blow-through-then-reverse area so being backed up by some tech may lend some extra strength to it.

USDJPY H1 chart

Back on the daily chart and the 55 dma offers the next support down at 102.54 before we head to the 61.8 fib at 102.15. These tech levels are all coming in round about where we'd see some natural support.

For the upside, 103.45/50, 103.75/80 and 104.00 are going to be the main resistance levels to look for.

Tonight's FOMC should pass by without a fuss but any stronger indications that Dec is the hike date might see dollar rallies met in force by the sellers looking at the election risk, so be wary jumping on a jump and hoping for the stars. If the announcement is flat on rhetoric then no doubt the buck will suffer some further downside, as above, be wary of going heavy on that dip.

The calendar is sparse of any major data now so expect to see the usual jockeying of positions in the run up to the FOMC. That may include some profit talking from these recent moves.