FxWirePro: USD/JPY consolidates channel break, focus on FOMC for further impetus

• USD/JPY is consolidating breach of slopping channel seen last week.
   
• Price action however remains capped below 5-DMA at 108.90, bias lower as long as pair holds below.
   
• Breakout above 5-DMA at 109.28 could see upside till 61.8% Fib at 110.15 and then 20-DMA at 111.06.
   
• We do not see any major signs of reversal in the pair. Momentum studies bearish.
   
• RSI and Stochs are deeply in oversold territory which keep the possibility for correction, scope for rollover into neutral.
   
• On the downside we see scope for test of 108.16 (88.6% Fib ahead of 107.31 (Sept 8 low).
   
• For the week ahead, eyes will be on nonfarm payrolls, ISM manufacturing PMI and the FOMC for further impetus.

Support levels - 108.60 (Aug 18 low), 108.26 (Aug 29 low), 108.16 (88.6% Fib)

Resistance levels - 108.90 (5-DMA & 78.6% Fib retrace of 107.318 to 114.737 rally), 109, 109.70 (channel base)

FxWirePro Currency Strength Index: FxWirePro's Hourly USD Spot Index was at -82.726 (Bearish), while Hourly JPY Spot Index was at -9.35163 (Neutral) at 1030 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.

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