At the yesterday’s meeting, the Fed, as was expected, increased interest rates in the US that significantly supported the pair.
In addition, data on Trade Balance for November that came out this morning in Japan turned out to be substantially worse than forecasts. Imports shrank by 10.2%, while exports contracted by 3.3%. Trade balance deficit amounted to 379.7 billion Yen.
Therefore, supposed gradual increase of interest rates in the US and probable monetary policy easing in Japan are going to support the pair in the medium term.
Tomorrow attention needs to be paid to the Bank of Japan Interest Rate Decision.
Support and resistance
On the daily chart, the pair is moving along an ascending channel between the levels of 120.55 and 125.00, while continues trading in a wide range between the levels of 123.70 (23.6% Fibonacci correction) and 120.55 (ЕМА200 on the daily chart, 61.8% correction).
On the 4-hour chart, the price broke out resistance levels at 122.00 (ЕМА50), 122.20 (ЕМА200, ЕМА144), while a consolidation above the level of 122.50 (38.2% correction) would resume an upward trend. At the same time, a breakdown of the level of 120.55 will start a downward trend.
On the daily chart, OsMA and Stochastic recommend long positions.
Support levels: 122.00, 121.50, 120.55.
Resistance levels: 122.50, 123.00, 123.70.
Long positions can be opened above the level of 122.55 with targets at 123.00, 123.30 and stop-loss at 122.20.
Short positions can be opened below the level of 122.10 with targets at 121.65, 121.50 and stop-loss at 122.40.