- The USD / JPY witnessed some selling on Wednesday and moved away from the highs of more than a week.
- The formation of a symmetrical triangle points to indecision about the short-term trajectory.
The pair USD/JPY it extended its steady intraday retracement from the week-and-a-half highs and continued to lose ground during the early days of the American session. The pair updated daily lows in the last hour and was last seen hovering around the 109.85-80 region, losing 0.20%.
Investors are being wary of the long-awaited FOMC policy decision. This was evidenced by a generally softer tone around equity markets, which, in turn, benefited the Japanese yen as a safe haven. Bearish traders followed the signs of a modest decline in US Treasury yields and a subdued demand for US dollars.
From a technical perspective, the recent bounce from the confluence support at 109.20-15 stalled near a downtrend line that extends from the yearly highs touched in March. This, along with another rising trend line, constitutes the formation of a symmetrical triangle and points to indecision about the next leg of directional movement for the USD / JPY pair.
Meanwhile, technical indicators on the daily chart are comfortably in positive territory and support prospects for an eventual breakout to the upside. With that said, it will still be prudent to wait for a convincing break through the triangle hurdle, around the 110.15-20 region before positioning for any further appreciation moves.
The USD / JPY pair could then break above the monthly swing highs around the 110.30-35 region and accelerate the momentum towards the 111.00 zone.
On the other hand, immediate support is pegged near the 109.65 region, below which the bears are likely to challenge the 109.20 support area. The mentioned region marks the lower boundary of the symmetrical triangle and is closely followed by the 50-day SMA around 109.00. A convincing break below will negate any short-term positive moves.
The next relevant support is tied near the horizontal level of 108.70, below which bearish traders could push the USD / JPY pair further towards levels below 108.00 in the near term.
Daily chart
Technical levels
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