USD/JPY attempts to bounce up from 141.00 after the post-Fed sell-off

• The USD finds some support at 141.00 after Wednesday’s decline.
• Upside attempts remain limited with the Dollar Index at multi-month lows.
• The pair might consolidate ahead of Friday’s BoJ decision.

The Dollar seems to have found some support at the 141.00 area after having lost nearly 3% following Wednesday’s Fed decision. The pair, however, remains unable to post a significant recovery, with the Dollar index depressed at four-month lows.

The US Federal Reserve left its benchmark rate unchanged at the 5.25% - 5.5% channel but hinted at the end of the tightening cycle with chair Powell highlighting the fast decline in inflation.

Beyond that, the economic forecasts pointed out slow growth, and the interest rate projections anticipated 75 bp cuts next year, above the 50 bp cuts seen in September. This revives hopes of rate cuts in March and has sent the US dollar lower across the board.

The focus is now on the Bank of Japan which will release its Monetary policy decision on Friday. Investors have been speculating about the possibility of a major policy shift announced at December’s meeting, although BoJ officials have played down that option.

USD/JPY Technical analysis

From a technical perspective, the pair is trading at the bottom of an expanding wedge, at 141.00 with the oversold levels on the 4h RSI suggesting the possibility of some correction.

An upside attempt would be challenged at 142.50 and at the 144.45 previous support.

Below 141.00 the pair might find support at the 140.00 area, the 261% Fibonacci extension of the mid-November reversal ahead of the July 27 low, at 138.15. 
 

USD/JPY 4-hour chart

Technical levels to watch