Daily Market Report – USD/JPY Rallied Ahead FOMC November 01, 2017

USD/JPY Breakout Attempt

The currency pair has registered an important increase today and has resumed the yesterday’s bullish candle. Price climbed as much as 114.27 level where has found temporary resistance again. The rate is pressuring an important confluence area right now, a valid breakout will accelerate the upside momentum. Remains to see what will really happen because the rate will be driven by the fundamental factors as the FOMC Statement could shake the currency market. The FED is expected to maintain the Federal Funds Rate steady at 1.25%, another hike could take place in December.

The price increased today, but wasn’t really inspired by the United States data, the ADP Non-Farm Employment Change increased to 235K in October, beating the 202K estimate and the 110K in the former reading period, but has dropped again as the ISM Manufacturing PMI was reported at 58.7 points, much below the 59.5 estimate and below the 60.8 in the former reading period.

The rate is pressuring the confluence area formed between the 23.6% retracement level with the median line (ml) of the ascending pitchfork. Price still tries to make a valid breakout above the median line (ML) and above the 23.6% retracement level, but we’ll see how will react after the FOMC. A breakout above the medium term 23.6% retracement level will confirm a further increase as the rate will escape from the extended sideways movement.

However, a false breakout above the confluence area will send the price towards the 250% Fibonacci line. You should be careful because the FOMC Statement will bring a high volatility.

EUR/USD Further Drop Still In The Cards

The price dropped and now is trading below the lower median line (LML) of the minor ascending pitchfork. EUR/USD failed to retest the median line (ML) of the major black ascending pitchfork, signaling that it should drop further. Technically, the price should approach and reach the lower median line (lml) of the minor descending pitchfork and the SL.

USD/CHF Above Parity

The rate rallied and jumped above the 1.0000 psychological level and looks determined to reach the 1.0036 previous high. I’ve said yesterday that the rate could retest the median line (ml) of the ascending pitchfork before will climb towards the 1.0091 horizontal resistance.

USD/CHF is bullish after the retest of the 250% Fibonacci line (ascending dotted line), could be attracted by the Wl1 as well.

By Olimpiu Tuns – Market Analyst

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