FOMC Coming Up! Today’s Dollar Selling Strategy! ~ January 30 Strategy ~
◎Strategy
USD/JPY Sell Strategy
・Entry point → below 109.00 yen
・Entry timing → after the FOMC press conference
◎Fundamental Analysis
Reasons to Buy
・Resolution of government agency shutdown
・Expectations of improvement in U.S.-China relations in trade talks
・Expectation of rate hikes
Reasons to Sell
・Economic impact from government shutdown
・Concerns about negotiations breaking down in U.S.-China trade talks (issues like Huawei, intellectual property)
・Concern about end of rate hikes
・Economic impact from tariffs
・Recession concerns
・Concerns about another government shutdown due to temporary budget expiration
Today, ADP Employment Statistics release and the FOMC policy rate announcement are scheduled. Also continuing are indicators delayed during the shutdown, such as NFP payrolls and ISM releases. Recently, market reactions to economic indicators have become weaker. Current focus is on Fed actions: number of rate hikes, timing of the end of hikes, neutral rate, and balance sheet reduction revisions.
Today, a hold is expected at the FOMC as well,with attention on Chair Powell's press conferencelikely. The number of rate hikes is expected to be 1–2, and balance sheet reduction may continue,and it is anticipated to be more dovish than in Decemberthan in December. It is not expected to become more hawkish.
Therefore,if this press conference is dovish, I will pursue a dollar-selling strategy.
Also, regarding the above bullish/bearish factors, although there are many bearish factors, the bullish factors are largely conditional on outcomes and could turn into bearish factors depending on results. In the long run, I think the dollar will head lower.
In the short term (day trading), I may target about 30–50 pips, or look to aim around 105 yen in the longer term, depending on momentum and additional fundamentals.
◎Technical Analysis
USD/JPY Daily Chart
Looking at the daily chart, the flash crash fall has halted near last year’s lows. Since last December’s decline, a half retracement has not yet occurred. Looking at the Oanda order book, large sell orders appear near the 110.25 yen half-retrace line.
USD/JPY 4-Hour Chart
USD/JPY 1-Hour Chart
On the 4-hour and 1-hour charts, the price is being held down by long-term moving averages (144SMA and 169SMA). Since there are visible sell-stop orders below 109 yen, I plan to look to sell below 109 yen. A key point is the large buy orders around 108.50 yen, which could become a take-profit target, or if downside momentum strengthens, I would consider adding positions.
