Dips with the lower dollar
The USDJPY is following the dollar in trading today as the weaker industrial production and capacity utilization are weighing on the greenback. The market seems to be questioning the "patience" or "no patience" argument a little more. Can the Fed ignore the weak data or will they make the judgment the 1st quarter is weather impacted. That will be the debate until the Wednesday decision. And it may also keep this pair confined between support and resistance.
Technically, the price has fallen back below the 100 hour MA (blue line in the chart above - now resistance). The price has been going above and below the line over the last few trading days. The market was saying it does not know which way to go. With the move lower today, it may be that traders are looking to move away and test the a lower support extreme. Another clue comes from the 100 hour MA which is sloping lower for the first time since February. Staying below that MA line, could shift more focus to the downside support
What is the support on the downside? The price is approaching trend line support at the 121.03 level. Below that the 200 hour MA awaits at 120.88. The price has not been below the 200 hour MA since February 26th.
With the uncertainty from the Fed looming, I would expect that buyers and sellers will lean against the aforementioned support and resistance levels with a bigger move after the decision is known. If there is a pre-Fed break, there may be some temporary momentum in the direction of the break, but I would expect that the action would be limited for this pair.
