USD/JOY bids losing traction while DXY consolidates, scoring below 101 overnight

Currently, USD/JPY is trading at 114.91, down -0.09% on the day, having posted a daily high at 115.11 and low at 114.73.

USD/JPY has started to correct the bid from highs of 116.11 down to 114.71 and is now in a phase of consolidation as the DXY gives up its gains above the 101 handle ahead of the FOMC this week. Markets are pricing in a 25bps hike, but should this not come at this meeting the dollar could find itself dropping, albeit supported on speculation under Trump's expected protectionist policies in a global shortage of dollars.

US dollar index back below 101.00, retreats ahead of FOMC meeting

CFTC Commitment of Traders Report - Rabobank: "Having turned negative for the first time since December 2015 last week, net yen shorts soared last week. The recovery in the USD is the primary factor behind this move."

Meanwhile, looking ahead, the Japanese economy remains fragile with the BOJ estimating trend Japanese growth nearer 0.2%. However, a weaker Yen remains positive for the Japanese economy although a concern is that oil continues to rise, hurting Japanese imports on both the fall in the Yen and rise in the price of oil.

USD/JPY levels

Current price is 114.92, with resistance ahead at 115.02 (Daily Open), 115.11 (Daily High), 115.23 (Hourly 20 EMA), 115.24 (Monthly High) and 115.24 (Weekly High). Next support to the downside can be found at 114.85 (Yesterday's Low), 114.85 (Daily Classic PP), 114.73 (Daily Low), 114.50 (Weekly Classic PP) and 114.46 (Hourly 100 SMA).