USD/JPY: US Dollar trades sideways as tax optimism fades away

The USD/JPY is trading flat at around 113.40 against Japanese yen on Tuesday ahead of expected interest rate hike from Fed on Wednesday.

The report on Japan’s tertiary industry rising 0.3% over the month in October earlier on Tuesday had a marginal market effect on USD/JPY currency pair

The USD/JPY is trading sideways after the US Dollar regained 113 level against Japanese yen a few days ago, but the upmove is losing steam. The US tax reform optimism is fading away and the US rate hike fully priced-in, so market needs fresh impulses to set a new trend.

Technical Outlook

With the USD/JPY currently in solid uptrend from 110.90 lows, corrections lower are seen as a chance to buy. Breaking key round level of 113.00 was very important for the US Dollar as this is seen opening the way for multi-month range highs at 114.25/114.70.

Momentum indicators are neutral with Relative Strength Index and MACD both around the zero area and Momentum pointing slower also just above zero on 1-hour chart.

Technically this is an indication of the USD/JPY taking a pause before another move higher, most likely be triggered by either Fed economic projections or Janet Yellen comment during the Fed press conference after the FOMC meeting.