The Japanese Yen fails to builds on its modest intraday uptick against the USD on Wednesday.

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• The Japanese Yen fails to builds on its modest intraday uptick against the USD on Wednesday.
• Geopolitical risks and China’s economic woes could benefit the JPY amid the BoJ’s hawkish tilt.
• Traders might further prefer to wait on the sidelines ahead of the crucial FOMC policy decision.

The Japanese Yen (JPY) attracts fresh sellers following an Asian session uptick against its American counterpart, though lacks follow-through and remains confined in a familiar range held over the past week or so. Japanese Retail Sales and Industrial Production figures for December missed market expectations, which, in turn, seem to undermine the domestic currency. Apart from this, a modest US Dollar (USD) uptick, supported by diminishing odds for a more aggressive policy easing by the Federal Reserve (Fed) in 2024, assists the USD/JPY pair to attract some buyers near the 147.20-147.15 region.

That said, hawkish signals from the Bank of Japan (BoJ) Summary of Opinions, along with persistent worries about geopolitical risks stemming from conflicts in the Middle East and China’s economic woes, should help limit losses for the JPY. Traders also seem reluctant to place aggressive directional bets and prefer to wait for the outcome of the highly-anticipated two-day FOMC meeting, scheduled to be announced later today. Investors will look for cues about the timing of the first interst rate cut by the Federal Reserve (Fed), which will drive the USD and provide a fresh impetus to the USD/JPY pair.

Heading into the key central bank event risk, traders on Wednesday will confront the release of the US ADP report on private-sector employment and Chicago PMI for short-term opportunities during the early North American session. In the meantime,
declining US Treasury bond yields could act as a headwind for the buck, while the recent narrowing of the US-Japan rate differential lend support to the JPY. This, in turn, warrants some caution before positioning for any further intraday appreciating move for the USD/JPY pair.

From a technical perspective, the USD/JPY pair has been oscillating in a familiar range around the 100-day Simple Moving Average (SMA) over the past two weeks or so. This points to indecision among traders over the next leg of a directional move and warrants some caution. In the meantime, the 147.00 mark could protect the immediate downside and any subsequent slide is likely to find decent support near last week’s swing low, around the 146.65 region. Some follow-through selling, however, will be seen as a fresh trigger for bearish traders and pave the way for deeper losses.

On the flip side, the 147.65 area could act as an immediate hurdle ahead of the 148.00 round figure and the 148.30-148.35 zone. The next relevant hurdle is pegged near the monthly peak, around the 148.80 region. Given that oscillators on the daily chart are holding comfortably in the positive territory, a sustained strength beyond the latter will be seen as a fresh trigger for bullish traders. The USD/JPY pair might then surpass the 149.00 mark and climb to the 149.30-149.35 intermediate hurdle before aiming towards reclaiming the 150.00 psychological mark.

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