USD/JPY is trading under pressure. The pair remains weak below its key resistance at 117.10. Both the 20-period and 50-period moving averages have already turned down, and should continue to push the prices lower. Besides, the relative strength index is mixed to bearish below its neutrality area at 50.
The minutes of the U.S. Federal Reserve's latest monetary policy meeting showed a less hawkish tone than expected by investors. The minutes stated, "Participants expected that, with gradual adjustments in the stance of monetary policy, economic activity would expand at a moderate pace and labor market conditions would strengthen somewhat further. Inflation was expected to rise to 2% over the medium term. Members agreed that there was heightened uncertainty about possible changes in fiscal and other economic policies as well as their effects."
The ICE U.S. Dollar Index eventually tumbled from the 103.00 level. It sank 0.5% on day to 102.70. The currency came under pressure after the Fed meeting minutes showed that central bankers were uncertain about how the U.S. economy would be influenced by the incoming presidential administration.
Hence, as long as 117.10 is not surpassed, look for a new pullback to 115.60 and 115.15 in extension.
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 115.60. A break below this target will move the pair further downwards to 115.15. The pivot point stands at 117.10. If 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 117.50 and the second one at 117.90.
Resistance levels: 117.50, 117.90, 117.50
Support levels: 115.60, 115.15, 114.65
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