USD/JPY hovers near 10-month highs ahead of Fed

USD/JPY advanced modestly on Tuesday, although it remains capped by its 10-month high scored the previous day as investors refrain from taking big positions ahead of the FOMC verdict tomorrow.

USD/JPY pulled back from a high of 116.11 reached on Monday, but the downside was contained by the 114.70 area, confining the pair to a consolidation phase. At time of writing, USD/JPY is trading at 115.28, still up 0.24% on the day.

The Federal Reserve will announce its monetary policy decision on Wednesday, with a 25 bps rate hike broadly expected. However, focus might be on the wording and the "dot plot", as investors look for signs of the bank's’ next move.

USD/JPY levels to watch

In terms of technical levels, next resistances are seen at 115.46 (Dec 13 high), 116.11 (Dec 12 high) and 117.00 (psychological level). On the other hand, supports could be found at 114.72 (Dec 13 low), 114.31 (10-day SMA) and 114.00 (psychological level/Dec 9 low).

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