USD/JPY inches higher as buyers look to establish some near-term control

Technical Analysis

Author: Justin Low | usdjpy

USD/JPY trades at the highs for the day just above the 108.00 handle

USD/JPY H1 23-07
The move stems from the dollar being bid across the board as price is challenging to hold a break above yesterday's high of 108.07. Buyers are taking a peek above the 200-hour MA (blue line) @ 107.98 and in doing so are trying to establish more control in the pair.

Market pricing for a 50 bps rate cut by the Fed is easing slightly (down to 19% from 23% yesterday) so that's in part playing into the dollar move here. That will remain the key focus ahead of the FOMC meeting next week.

As such, pay attention to any further shift in sentiment and expectations ahead of key central bank decisions as that will determine how we will trade in the week to come.

For USD/JPY over the next two days, keep an eye on the 108.00 handle as well. There is a large chunk of expiries ($4.1 billion as of today) rolling off at that level tomorrow so that may play a part in limiting price gains over the next few sessions.

But as mentioned above, if Fed expectations start shifting around even more, that will be the key determinant for price action in the dollar. For now, we're not really seeing a profound impact as yields are more steady but best to be aware.

Further resistance in USD/JPY is seen around 108.15 before the swing region around 108.30 levels come into play, with offers lined up around 108.50 as well.

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