USD/JPY staged a strong rebound after dipping to 115.96 and suggesting that 116.13 provided the strong support as i expected. Initial bias is back on the upside this week for 120.33 support turned resistance first with 21 EMA converging 55 EMA to the upside, also SSRC oscillator indicates that further bullish momentum is expected in the pair. Break of 120.33 will target 123.74 high next. Overall, price actions from 125.85 are viewed as a sideways consolidation pattern and we’ll hold on to this view as long as 115.96 support holds.
In the week ahead, investors will be looking to Wednesday’s Fed policy statement for any indication that the bank is considering slowing the path of interest rate increases this year.
Markets will also be looking to Friday’s Bank of Japan’s latest monetary policy announcement, amid speculation recent market turmoil could lead the central bank to consider more asset purchases.
Later on Friday, investors will be monitoring data on U.S. fourth quarter gross domestic product, which is expected to show that growth slowed to a modest 0.8% from 2.0% in the third quarter.