Is the USD/JPY pair ready for growth?
USD/JPY pair was able to grow on Tuesday during the session, consolidating higher than the level of 95, which is acting like a support now. In fact, we assume that the level of support is spreading from 94 to 95, as a result we have to continue watching consumers engage in a game in the mentioned area. We will be able to see on the graph whether there was a significant sale of the USD/JPY pair, and that can be more or less connected with anxiety because of actions of Japanese government and their principles of currency politics, that is why many traders closed their long positions on this pair. However, interestingly enough even with a massive sale the market fell only on the line of 38.2% on Fibonacci from upper levels. In other words, the fall lasts about 900 points. The majority of traders is concentrating on short-term trading, selling the pair, but nevertheless in long-term perspective such adjustment is a common case, because the market can’t grow constantly.
Today the markets can be very volatile
During the session on Wednesday it will be especially hard to predict the market movement due to FOMC meeting and which is even more important questions and answers which will come after it. The volatility on the market can be provoked by the fact that market participants watch actions of two central banks at once – the USA and Japan. Federal Reserve System will be in a fishbowl, traders want to hear about politics of quantitative easing, and certainly if that occurs US dollar will get a big support, and we will see its consolidation. Similarly if we see its statement annulment, a significant weakening of US dollar will take place on the market.
The policy of quantitative easing will have a lowering pressure on EURO, the movement lower than 1.33 will show that the market is returning down to the previous area of consolidation, and that will be a signal to open positions for sale. On the other hand, if FRS assumes that their monetary policy is not in any danger we should expect that US dollar will continue to weaken, and EURO will rise in price noticeably. Besides one should watch closely the price fluctuations near the descending line f the trend on euro, which is an indicator of long-term movement of Euro.
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