USD/JPY bulls shy away from options barrier 112 the figure before FOMC tomorrow

Currently, USD/JPY is trading at 111.49, down -0.07% on the day, having posted a daily high at 111.89 and low at 111.20.

USD/JPY has been good tow way business between the Asian, European/Lnd and US sessions on Tuesday.USD/JPY was handed over to European trade 0.66% higher at 111.56 on a combination of bullish vibes. Firstly, USD/JPY was bid on abating risk aversion, secondly as Japanese traders returned, selling into the strength before buying back at 111.37. Then, the Nikkei rising and following suit of a robust Wall Street encouraged risk-on antipodean cross flows through the yen. Lastly, US Treasury yields were firmer ahead of Wednesday's FOMC meeting, expected to be positive for the yields (balance sheet tapering) and the dollar. 

However, the bears were taking control in the London afternoon ahead of Trump's address to the UN in a choppy session where the hourly cloud top at 111.20 was tested before Trump's speech got underway, resulting in a relief rally through the daily Ichimoku cloud at 111.60 that gave up yet again. Bulls even took out the 61.8% Fibo of the 114.49/107.32 move at 111.75 to score a session high of 111.88. The commitments have been weak though at this juncture with the pending FOMC outcome and sizeable option barriers sighted at 112 the figure. USD/JPY back to 111.40/50 closing area.

FOMC forecast:

Fed preview: Scope for aggressive balance sheet normalization

USD/JPY levels

Omkar Godbole, an analyst at FXStreet, explained that the price action on the monthly chart indicates the pair is set to test 115.00 levels. 

"The spot currently trades above the 200-DMA of 111.47. The 14-day RSI is above 50.00 and yet to hit the overbought territory. However, the Stochastics [5,3,3] is overbought, thus a minor pullback could be seen.

Bulls have nothing to worry about unless the spot closes below the 10-DMA, which currently stands at 110.11."