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Hey all! If you’re looking at potential trades ahead of the Fed’s event this week, then you might want to take a look at USD/JPY’s 4-hour chart with me.

As you can see, USD/JPY is finding support near the 109.25 levels, which is right around the ascending channel support that has been solid since the start of the year.

I’m not too convinced that it will extend its uptrend, however. For one thing, I’m also seeing a possible bearish pennant that could take the pair down to levels closer to the bottom weekly ATR and the 100 SMA on the chart.

USD/JPY 4-hour Forex Chart
USD/JPY 4-hour Forex Chart

It also doesn’t help that the Fed’s first huddle this year is one that a lot of market players will pay attention to.

See, while no one is expecting any monetary policy changes from Governor Powell and his friends, many will be interested to see how they will balance optimism and cautiousness.

If you recall, Fed members remained optimistic on the economy in December and even projected two more rate hikes in their dot plot for 2019.

But that was last month. Between the government shutdown, dip in consumer confidence, delay in key economic reports, global economic slowdown, and risks associated with Brexit and the U.S.-China trade war, the Fed has reason to sweat a bit.

Will Powell and the gang tweak their rhetoric to reflect a more cautious (and maybe low key accommodative) stance for the next couple of months? Or will they keep calm and carry on with their plans to continue tightening while waiting for more market data?

The ranges of what the Fed can do or say and how the market can react is too wide for biases at the moment. For now, I’m only expecting volatility with possibilities of intraweek trends.

If tomorrow’s events lead to a dollar rally, then I’ll be aiming for at least the top weekly ATR near the 110.00 levels. If reviews are mixed to negative, however, then I’ll wait for the pair to break below the channel on the chart and aim for areas of interest near 108.00 – 108.50.

How about you? Do you have any biases on the dollar ahead of the Fed’s event?

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