USD/JPY Daily Signals – December 13, 2017

Greenback fails to continue bullish

The U.S. Federal Reserve will announce its quarterly economic projections and Federal Open Market Committee (FOMC) statement later today. The extremely anticipated December meeting of the Fed is targeted to bring a 25 basis points rate hike. The market has priced in that progress before it was steadily telegraphed by policy makers but there is a 12.4 percent probability of a 50 basis points hike. If the central bank signifies to advance boost in the current rate cycle, the economists will forecasts 3 rate hikes in 2018 and the dot-plots could range with those estimates.

The Fed Chair Janet Yellen will announce her final implementation as Chair during the FOMC press conference today. As the much awaited December rate hike is anticipated to be announced, the Fed increases rates for the third time leaving the standard Fed funds rate in 125 to 150 basis points range.

The economy has not indicated any signs of overheating. This will be an argument used by the doves within the FOMC to reduce the hikes as the inflation remains weak.

A strong inflation would make Powell’s job apparent within the Fed. The dollar has increased following the Fed meeting as the producer prices have hiked more than anticipated. The higher price signal merged with a weaker than anticipated German ZEW economic attitude.

Following the release of the final results of the Alabama special election, US inflation data and the anticipated December Federal Open Market Committee meeting (FOMC), the USD was assorted against major pairs on Tuesday.

Dollar Yen has tested the resistance at the 113.60 level and was unable to break above it which aligns with trend line rejection. There is a clear indication that the dollar has lost its momentum going into today with some major news awaiting. The pair ranged between the 113.60 to the 113.4 level. The technical indicators have turned neutral in the four hour timeframes and continued to maintain a strong barrier hand. We will be using this opportunity to go short on USD/ JPY pair. Breaking of the pair at the 113.45 level should confirm the upward momentum that has been stopped and declined for upcoming days.

The price is well above its 50 and 100 Mas which are both lacking directional strength. The pair’s oscillator falls below the 50.0 level reflecting this range than suggesting exhaustion upward. The pair looks for a retest at the 113.225 and further down at 112.991 levels.


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