USDJPY: Key Levels to Watch for Today’s Fed Rate Decision

Fed rate decisions always trigger an increase in volatility. This is especially true for those that are accompanied by a press conference, as is the case with Wednesday’s event.

And just like any volatile event, I like to stay on the sideline to avoid getting caught up in the back and forth price action.

However, rate decisions and other market-moving news can also trigger breakouts. So instead of trading the news itself, I search through the aftermath to see if any favorable opportunities have developed.

The USDJPY is one pair I’ll be keeping an eye on following the upcoming Fed rate decision. We discussed this one over the weekend when it was trading at 110.81 and hadn’t yet retested the 111.90 resistance level.

A look at yesterday’s session shows how the pair encountered sellers at the 111.90 area. In fact, the session high was 111.88, just two pips below the key resistance level we reviewed on Sunday.

From here I’ll be watching for a break of the current range. Key support comes in at 110.90 while resistance sits at 111.90.

But like all breakouts, particularly those that occur during or after high levels of volatility, the session close at 5 pm EST will be key. A close above 111.90 would expose 113.15 while a close back below 110.90 would re-expose the 109.85 handle.

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