USD/JPY is under pressure. The pair is trading below its descending 20-period and 50-period moving averages and is likely to test its next support at 100.05. At the same time, 101.25 represents a strong resistance and the upside attempts should be limited by this level. Besides, the relative strength index has broken down its 30 level without showing any reversal signal. The U.S. Federal Open Market Committee pointed out in its policy statement, "the Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives."
Meanwhile, a rate increase in December is still likely. According to the median projection of forecasts released with the statement, the number of rate increases to come this year has been lowered to one from two previously. Besides, Fed Chairwoman Janet Yellen told a news conference that one rate hike this year could be expected if the jobs market keeps improving.
To sum up, as long as the resistance at 101.25 is not surpassed, the pair is likely to drop to 100.05 at first, and even to 99.60 in extension.
Trading Recommendation: The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 100.05. A break below this target will move the pair further downwards to 9960. The pivot point stands at 101.25. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 101.60 and the second one at 102.25.
Resistance levels: 101.60, 102.25, 102.75
Support levels: 100.05, 99.60, 99.25
The material has been provided by InstaForex Company - www.instaforex.com