USD/JPY Risks Larger Rebound On Growing Bets For March Fed Rate-Hike -

USD/JPY Risks Larger Rebound On Growing Bets For March Fed Rate-Hike

Jan 16, 2018Jeremy ParkinsonFinance0

USD/JPY snaps the recent string of lower lows, with the dollar-yen exchange rate at risks of staging a larger recovery should Federal Reserve officials boost expectations for a March rate-hike.

While the Federal Open Market Committee (FOMC) is widely anticipated to retain the current policy at the next interest rate decision on January 31, Fed Fund Futures now highlight a greater than 70% chance for a move in March as the central bank forecasts three rate-hikes for this year. In turn, market participants may pay increased attention to Cleveland Fed President Loretta Mester as the 2018 voting-member is set to speak over the coming days, and growing bets for higher borrowing-costs may fuel the recent rebound in USD/JPY especially as the Bank of Japan (BoJ) continues to embark on its Quantitative/Qualitative Easing (QQE) Program with Yield-Curve Control.

Nevertheless, the break of the descending triangle keeps the broader outlook tilted to the downside especially as USD/JPY clears the November-low (110.84), but the near-term decline in the dollar-yen exchange rate appears to have run its course as the Relative Strength Index (RSI) fails to push into oversold territory.

USD/JPY Daily Chart

May see USD/JPY also snap the series of lower highs following the failed attempt to test the 109.40 (50% retracement) to 110.00 (78.6% expansion) region.

Need a closing price above the 111.10 (61.8% expansion) to 111.60 (38.2% retracement) area to open up the former-support zone around 112.40 (61.8% retracement) to 112.80 (38.2% expansion).

Keeping a close eye on the RSI following the failed attempt to push into oversold territory, but the oscillator continues to cast a bearish outlook on a longer-term horizon as it extends the bearish formation carried over from the summer of 2017.

Fresh updates to the Euro-Zone Consumer Price Index (CPI) may do little to derail the near-term advance in EUR/USD as the European Central Bank (ECB) shows a greater willingness to end its quantitative easing (QE) program in 2018.