USD/JPY choppy around 5-DMA, Fed eyed

The USD/JPY pair is seen trading quite choppy so far this session, lacking a clear direction in the run up to the much-awaited FOMC verdict, which will be announced in the American afternoon.

USD/JPY supported at 115.00

The dollar-yen pair extends its overnight side-trend into the Asian session, with the bulls consolidating yesterday’s brief recovery to near 115.50 region, while the US treasury yields flatten, providing little incentive to the  major. The major is last seen changing hands at 115.19, almost unchanged on the day.

The major struggles to take on the upside as the yen remains underpinned by upbeat Japanese Tankan manufacturing surveys, which showed that big Japanese manufacturers' sentiment improved for the first time in six quarters in the three months to December to hit a one-year high.

All eyes now remain on the FOMC decision, despite markets already pricing-in a 25bps rate hike, as attention will remain on the Fed’s forward guidance for 2017. Looking ahead, markets now await the US retail sales and PPI numbers, although virtually no reaction is expected on the release.

USD/JPY Technical levels to watch 

The major finds immediate resistance at 115.50 (psychological levels). A break above the last, the major could test 116 (zero figure) and 116.12 (multi-month high) beyond the last. While to the downside, the immediate support is seen at 114.71 (Dec 13 low) next at 114.54 (10-DMA) and below that at 113.97 (daily S3).

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