USDJPY Daily Outlook Update USD/JPY has consolidated modestly higher off the 156.00 level, a one-month low made during yesterday's Asian trading hours, in tandem with broad-based strength in the US Dollar (USD). The price may continue to climb past 157.00, driven by a firm greenback, but it is set to suffer substantial losses on the weekly chart. While expectations of no rate hikes at the upcoming Fed meeting are growing, the chances of a rate hike before year-end remain close to 80% because of inflation risks from rising oil prices. In addition, political risks in the Middle East are keeping USD demand elevated due to safety concerns. Meanwhile, Japan's latest National Consumer Price Index (CPI) released today was consistent with market expectations for a forthcoming interest rate hike by the Bank of Japan (BoJ). Moreover, traders are cautious about any intervention if the Japanese Yen (JPY) continues to fall, which would limit the USD/JPY pair's upside ahead of key central bank events next week. Notably, the Federal Reserve (Fed) is expected to announce its rate decision at the end of its two-day monetary policy meeting scheduled for October 28. It will be succeeded by the BoJ meeting from October 29-30. In addition, traders will also have to deal with the release of the Advance US Q3 GDP and the Personal Consumption Expenditures (PCE) Price Index on October 31. The Japanese Yen ended the week stronger against the greenback as the USD/JPY lost more than 0.74% during the week, remaining strong daily amid bearish market sentiment. USD/JPY is trading at 156.85 on a hammer candle. The price action suggests a continuation of the sideways trend, with USD/JPY remaining range-bound between 156.00 and 159.00 (a 300-pip range). Neither buyers nor sellers can break above the range or below the immediate support levels. Momentum favors the bears as the 14-day RSI drops below the 50 neutral level. In other words, sellers are gaining strength. Thus, the bias is lower for now. The first support is the psychological level of 156.50. Next support is the October 23 daily low of 156.08, followed by the 155.00 level. A break below the latter level reveals the September 8 low of 152.89. On the upside, the first resistance is the 50-day SMA of 157.57. Further gains could move the price toward the 100-day SMA of 158.50, then the 200-day SMA of 159.35.
