The USDJPY came under aggressive selling pressure during the New York session on Thursday, sending it towards its 2020 lows that were last seen in March. This move comes ahead of the FOMC policy decision coming up in a few hours from now.
The general market consensus is that the Federal Open Market Committee (FOMC) may opt for a cautious approach under the present conditions where the US elections are undecided in an attempt to keep the greenback stable. Therefore, the interest rate and bond-buying programs are expected to remain unchanged.
The FOMC Chief has ruled out any possibility of negative rates in past statements. However, in the light of the worsening domestic coronavirus situation, the Fed Chair is likely to express concerns about the risks of the pandemic to the economy, which could be negative for the greenback.
The active daily candle has violated the support at 103.99 and is now testing the channel’s lower boundary. A breakdown of this border opens the pathway towards the 12 March 2020 lows at 103.046. 102.381 and 101.997 (10 March low) are additional downside targets that could come into focus if further declines are seen on the pair.
On the flip side, a bounce on the channel’s border will allow for a retest of 103.993. The opposing edge of the channel intersects the 104.981 and represents a logical upside target if the price continues to oscillate within the channel. However, attainment of this border would require positive momentum on the side of the bulls that takes out 104.56 along the way. Further advance towards 105.752 and 106.659 needs a break above the channel’s border.
