USD/JPY: hit on all sides with stock markets tanking

USD/JPY is on the backfoot with a resurgence in the yen as stock market bulls lay off the gas ahead of tomorrow's outcome of the two-day FOMC meeting that got underway today. 

DXY inter-markets: extra gains hinge on Yellen

The major concerns are whether Trump will be able to deliver the kind of fiscal policies that the market has already priced in if the house is split and a coalition can not be formed against a backdrop of the debt ceiling's time limit expiring tomorrow. Also, whether interest rate rises are going to be problematic to the stock market is another concern on investor's minds. At the same time, yields are lower as markets start to discount a faster pace of tightening and as investors look for cover in bonds from a waning stock market; other factors at play on an Intermarket basis lie with the price of oil:

US stocks weighed down by slump in oil prices; Fed in focus

USD/JPY levels

Despite the drop, analysts at Commerzbank explained on a technical basis, that only below 111.59 would negate their upside bias and introduce scope to Fibonacci support at 109.92 and if seen, the 200-day ma at 107.75. "We look for this to hold (this is also the 50% retracement of the move up from November). However this is not our favoured view - we also note that the recent move lower continues to indicate that this is the end of the corrective move."

On the upside, the analysts explained that It has for now stalled at the 115.62 mid-January high. " The 13 count on the 240-minute chart does suggest a decent pull back. Beyond this we look for a challenge to the key short-term resistance offered by the 16-month resistance line at 117.71 – and this remains our favoured view."