This week investors’ attention is going to be focused on the Fed meeting that is due 27-28 October and where the regulator will make a decision on interest rates.
The Bank of Japan meeting is planned for 30 October, where the regulator will also make its interest rate decision. Currently, the Japanese economy shows very weak signs of recovery, while the rate remains well below its 2% target.
If the Fed holds off from raising interest rates in the US, the Bank of Japan could be forced to ease its further.
Support and resistance
Last week the USD/JPY pair broke out the range between 120.60 (EMA144 and 61.8% Fibonacci correction) and 119.60 (EMA200 on the ) where it remained since the beginning of September, and reached the at 121.50 (50% correction).
Today the pair is in correction and may reach the level of 120.60, from where a new upward wave could start to the levels of 122.00, 122.50 (38.2% correction), 123.70 (23.6% correction), 124.50.
However, a price return below the level of 119.60 could resume a downward trend.
OsMA and on the 4-hour chart recommend short positions, while on the OsMA is turning to sales as well.
Support levels: 120.60, 120.25, 119.60.
Resistance levels: 121.50, 122.00, 122.50.
Pending buy orders can be placed at the level of 121.20 with targets at 121.40, 121.90, 122.40 and stop-loss at 120.80.
Pending sell orders can be placed at the level of 120.70 with targets at 120.30, 119.90, 119.70 and stop-loss at 121.10.
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