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USD/JPY Trading in a Range Ahead of FOMC

The USD/JPY has been bearish in 2015 so far, falling from around 120.75 down to 115.85 before rebounding. 

USD/JPY 4H Chart 1/28
(click to enlarge)

The rally since the 115.85 low broke above a falling trendline, but has not cleared the moving averages in the 4H chart. Essentially the market was poised for a bullish continuation but failed to revive the uptrend. It is consolidating, cautious ahead of a key FOMC meeting.

Why is this such a key meeting? Because the hawkish expectations of the FOMC raising rates by mid-2015 is now in doubt.
1) Since the last FOMC meeting, economic data has stalled, with inflation and retail sales sliding. Employment data was okay, but lack of wage growth disappointed.
2) The BoC, SNB have surprised with rate cuts. The BoE minutes showed a more dovish stance. The ECB finally announced QE to start in March. These actions by other central banks are pressuring the Fed to delay its rate hike plans.

So, we should watch the 117.17 to 118.85 range. The FOMC statement should guide it out of this range and give the market a sense of direction for the USD. If the FOMC projects a delay in rate hike, we should anticipate pressure back towards the 115.66-116 lows, which is the triangle support seen in the daily chart.

USD/JPY Daily Chart 1/28
(click to enlarge)

If the FOMC remains steadfast, the USD should be able to push above 118.85. The next key resistance will be around 120, the triangle resistance. Above that, USD/JPY will likely be reviving its uptrend, at least to test the 2014-high at 121.70.