The USDJPY is reacting positively today on the back of higher stocks and also a more favorable technical picture.
Looking at the hourly chart, the price moved above its 100 hour moving average at 113.894 in the late Asian session, and extended above its 200 hour moving average (green line at 114.153) in the European morning session. Getting above - and staying above the 200 hour moving average - was a more bullish development technically. The pair had not traded above its 200 day moving average since January 11. The 200 hour moving average currently comes in at 114.153.
On the topside, the pair is approaching swing levels between 114.45 and 114.55. Just above that sits the 38.2% retracement of the 2022 range at 114.562. A downward sloping trendline cuts across near the 38.2% retracement as well on the hourly chart. That level will be a key target level today. Get above would open the door for more upside momentum.
On the downside, a move back below the 200 hour moving average would have traders looking toward the swing area between 113.95 and 114.04. Below that level is the 100 hour MA at 113.894. Move below that level would increase the bearish bias for the pair and negate any bullish developments seen in trading today.
What is the longer view from the daily chart saying from a technical perspective?
Taking a look at that chart below, the picture is also tilted in the bulls direction despite the move lower in January.
The low price earlier this month - and again this week - stalled right near the 38.2% of the move up from the August low (the start of the move higher into January). Holding that level (at 113.43) kept the buyers more in control despite the move lower in January.
Note also that the 100 day MA at 113.346 is moving closer to that retracement level increasing the areas importance through the FOMC. A move below the 38.2%, the lows for the month and the 100 day MA would be the trifecta for technical traders. Be aware.
With the USDJPY price moving bck above the 200 hour MA on the hourly chart, and basing near the 38.2% on the daily chart, the bias is a bit more bullish. However, there will he a high degree of risk through the FOMC decision at 2 PM ET with a lot to decipher through the announcement and press conference.
As a result, be sure to quantify your risk tolerance and stick to your trading plan if you do decide to trade through the rate decision. Of course, the technical levels help achieve this objective as they help find risk and bias for traders.