Most of the previous trading session the currency rate spent moving towards the 23.6% level located at 114.03. Nevertheless, this target was not achieved due to formed near the 113.70 mark. As for today, a minor retreat back to 113.20 is possible. However, the Yen unlikely to gain much value due to pressure from the rising 55-, 100- and 200-hour SMAs. On the other hand, it looks like the pair is moving in a new formation, which presupposes a breakout towards the level. In case of such mixed signals there is a need to turn to the overall fundamental picture, which is in favor of the buck, as markets anticipate the interest rate hike.
During yesterday’s trading session the currency exchange rate made two attempts to break to the bottom towards the 50% retracement level located at 113.00. However, as markets focused on tomorrow’s Fed meeting, the pair failed to bypass even the 55-hour SMA that was backing up the lower trend-line of another rising wedge formation. And only in the early morning it managed to sneak below the 113.47 mark. Accordingly, until release of information on the American PPI the pair is expected to continue moving in southern direction and trying to reach the bottom edge of a new junior descending channel that lies slightly above the major support zone located between the 113.11 and 113.00 marks.
Despite release of better than expected US PPI data, bulls could not push the pair through resistance zone located between the 113.67 and 113.74 marks. Accordingly, this barrier triggered a rebound that lasted until the pair reached the 100-hour SMA. Until publication of an update on the American inflation, the currency rate is expected to move horizontally between the 55- and 100-hour SMAs. In case of a negative result, the pair is likely to plunge to support zone located near the 50% Fibonacci retracement level at 113.00.
However, the subsequent Fed decision is likely to lead to aggressive acquisition of the buck, which will drive the rate above the 114.00 mark. In best case scenario the currency rate might end up this trading session near July maximum located at 114.50.