#USDJPY @ 131.364 hovers near the 131.00 level with bearish bias ahead of a crucial Fed decision. (Pivot Orderbook analysis)

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• USD/JPY hovers near the 131.00 level with bearish bias ahead of a crucial Fed decision.
• US Dollar under pressure amid struggling global banking sector and excess liquidity.
• Investors brace for potential volatility as the market anticipates for 25 bps rate hike from Fed.

The pair currently trades last at 131.364.

The previous day high was 132.65 while the previous day low was 130.54. The daily 38.2% Fib levels comes at 131.34, expected to provide support. Similarly, the daily 61.8% fib level is at 131.84, expected to provide resistance.

USD/JPY hovers around the 131.00 mark during Tuesday’s Asian session, maintaining its bearish bias.

Although US Treasury (UST) bond yields received a boost on Monday, USD/JPY failed to capitalize significantly. This can be attributed to the struggling global banking sector, as many commercial banks began to falter last week. Consequently, investors rushed to purchase UST bonds, causing yields to decline.

USD/JPY closely follows the UST yield direction, so it is unsurprising that the US Dollar remains under pressure. Earlier this week, the Federal Reserve restarted swap lines to provide US Dollar liquidity to central banks in need, in addition to the Fed’s discount window. This rapid action has flooded the market with excess US Dollar liquidity, resulting in widespread weakness.

As the market heads toward Wednesday’s FOMC meeting, caution is advised. The global banking system is already strained, and a further increase in borrowing costs could exacerbate existing issues. The market anticipates a 25 basis point (bps) rate hike from the Fed.

Trading during the FOMC event requires extra caution, as this meeting is not a typical one with pre-set expectations. With investors divided over various variables, volatility is expected. It is always recommended to be especially careful, as the market could reverse during the press conference.

It is crucial to pay attention to Fed Chair Jerome Powell’s press conference, as the media will scrutinize his statements for any unexpected comments that could trigger market volatility.

Technical Levels: Supports and Resistances

USDJPY currently trading at 131.34 at the time of writing. Pair opened at 131.33 and is trading with a change of 0.01 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 135.06, 50 SMA 132.53, 100 SMA @ 135.1 and 200 SMA @ 137.46.

The previous day high was 132.65 while the previous day low was 130.54. The daily 38.2% Fib levels comes at 131.34, expected to provide support. Similarly, the daily 61.8% fib level is at 131.84, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 130.36, 129.4, 128.25
• Pivot resistance is noted at 132.47, 133.61, 134.58

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