Japanese Yen slips lower from multi-year highs, caution seen ahead of Fed policy decision

Chart - Courtesy Trading View

A rebound in the positive market sentiment has undermined demand for the US dollar.

On the data front, US PPI matched 0.8% MoM forecasts, also easing to 10.8% YoY figures versus 10.9% expected and prior readouts.

Further, core PPI (ex Food & Energy), dropped below 8.6% YoY forecasts to 8.3%, data released on Tuesday showed.

Further, markets remain cautious and refrain from placing any aggressive bets ahead of the Fed policy decision.

The Federal Reserve is expected to remain on the extremely hawkish side amid soaring inflation.

That said, signs of exhaustion were displayed by the US dollar index DXY, as clouds of uncertain Fed policy loom again.

Spot Analysis:

USD/JPY was trading 0.59% lower on the day at 134.66 at around 07:00 GMT.

Previous Week's High/ Low: 134.55/ 130.42

Previous Session's High/ Low: 135.47/ 133.87

Technical Analysis:

- USD/JPY has erased most of the previous session's gains

- Price action hovers around 5-DMA support

- GMMA indicator shows major and minor trend are bullish

- Volatility is high and momentum is bullish, but overbought oscillator warrant caution

Major Support and Resistance Levels:

Support - 133.23 (200H MA), Resistance - 136.67 (Upper BB)

Summary: USD/JPY trades with a bullish technical bias. Pullbacks on account of overbought conditions are likely to be shallow.