DailyFX Table



USD/JPY remains under pressure even as the U. of Michigan Confidence survey unexpectedly climbs to 102.0 from 99.7 in February, and the near-term rebound may continue to unravel ahead of the Federal Open Market Committee (FOMC) meeting as the pair extends the bearish sequence from earlier this week.

Fed Funds Forecast

Even though the FOMC is widely expected to raise the benchmark interest rate on March 21, the updated forecasts from Chairman Jerome Powell and Co. is likely to influence the near-term outlook for the U.S. dollar as the central bank pledges to further normalize monetary policy over the coming months. The FOMC may deliver a hawkish rate-hike as the ongoing improvements in labor market dynamics are expected to boost wage growth, and the first press conference with Chairman Powell may heighten the appeal of the dollar if the central bank head shows a greater willingness to implement a more aggressive hiking-cycle.

At the same time, projections for three rate-hikes in 2018 may do little to heighten the appeal of the greenback as officials see a neutral Fed Funds rate of around 2.75% to 3.00%, and more of the same from central bank may ultimately fuel the recent decline in USD/JPY as it undermines bets for four rate-hikes in 2018. With that said, the monthly-low (105.25) remains on the radar following the failed attempt to close above the 106.70 (38.2% retracement) to 107.20 (61.8% retracement) region, with the pair at risk for further losses as it continues to carve a series of lower highs & lows.


USD/JPY Daily Chart


  • May see USD/JPY test the 2018-low (105.25) as it preserves the bearish sequence from earlier this week, but need a break/close below the 105.40 (50% retracement) to bring the downside targets on the radar, with the next region of interest coming in around 104.10 (78.6% retracement) to 104.20 (61.8% retracement).
  • Keeping a close eye on the Relative Strength Index (RSI) as it fails to flash a bearish trigger ahead of the FOMC meeting, with the oscillator warning of range-bound conditions as it holds above trendline support.
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