USD/JPY is expected to advance further. The pair is accelerating on the upside, backed by its rising 20-period moving average. A new challenge to its next resistance at 117.85 seems more likely to occur. The relative strength index stands firmly above its neutrality level at 50.
The widely expected decision to lift the benchmark federal fund rate by a quarter-percentage point was taken by a unanimous vote of the ten members of the Federal Open Market Committee. Apart from raising interest rates, the Fed officials also signaled that they expect to raise short-term rates three times next year as the U.S. economy shows signs of improvement, up from their previous estimate of two increases. U.S. government bonds pulled back sharply sending the benchmark 2-year Treasury yield up to 1.239%, its highest close since August 2009, from 1.169% Tuesday, and the benchmark 10-year Treasury yield to a two-year high of 2.523% from 2.484% in the previous session. he ICE U.S. Dollar Index marked a day-high of 102.35, the highest intraday level since January 2003, before settling at 101.76, up 0.7% on day.
Thus, as long as the key level at 116.65 is not broken below, look for a further upside toward 117.85 and even 118.25 in extension.
Trading Recommendation: The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. Therefore, long positions are recommended with the first target at 117.85 and the second one at 118.25. In the alternative scenario, short positions are recommended with the first target at 116.35 if the price moves below its pivot point. A break of this target is likely to push the pair further downwards, and one may expect the second target at 116.05. The pivot point lies at 116.65.
Resistance levels: 117.85, 118.25, 118.50
Support levels: 116.35, 116.05, 115.50
The material has been provided by InstaForex Company - www.instaforex.com