USD/JPY Price Forecast – US dollar rallies but gives up gains against yen

The US dollar has rallied initially during the day on Wednesday, reaching towards the 100 level ¥0.75 level. I think that a short-term pullback shows signs of the market getting ahead of itself before the FOMC statement. The market participants continue to look to the ¥110 level as support, and I think that it’s only a matter of time before the buyers step in if we get closer to that area. The market of course has a lot to do with interest rate differentials between the couple of economies, and at this point it looks very likely that the United States will continue to raise rates, the statement could give us an idea of how aggressive the Federal Reserve will be.

The more aggressive the statement, the more aggressive this move to the upside will be. If we break down, the ¥109.25 level underneath should be massive support. I think there will be a lot of volatility to say the least, but ultimately I do think that we will find buyers. Because of this, I still retain a bullish attitude, but I also recognize a position sizing will be crucial. Once we get through both the Federal Reserve statement and the ECB statement today, we should then get enough clarity to continue going higher. In general, I believe that the market will be noisy, but should continue the overall uptrend. I look at it as offering value on short-term dips.