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USD/JPY stuck around 1h 100-SMA pre-European open

FXStreet (Mumbai) - The USD/JPY rally seen in Asia fizzled near 123.30 region as we head into the early European trades, as the USD bulls take a breather and consolidate gains on 123 handle.

USD/JPY retraces from 123.26 – two-day highs

Currently, the USD/JPY pair trades 0.28% higher at 123.16, facing stiff resistance near 123.25 zone. The rise in the discount rate expected to be announced by the Fed later today, would signal that the Fed has embarked upon the policy normalization process, and now keeps the bulls in a wait-and-see mode before the next leg higher towards August highs.

Moreover, the upbeat sentiment in the global equities also boosts the appetite for riskier assets, thus offering support to the USD/JPY pair. While Fed’s William’s comments that should data meet or beat expectations, there is a 'strong case' for a December hike, also underpins the major.

While the Fed announcement is likely to remain the main highlight, the US manufacturing and housing data will be also closely watched.

USD/JPY Technical levels to watch

The prices surpasses 123 handle and face immediate resistance at 123.64 (Nov 20 High). A break above the last, the major could test 124.17 (Aug 21 High). To the downside, the immediate support in sight at 122.97 (10-DMA) below which 122.54 (20-DMA) would be tested.

German PMI preview: What to expect of EUR/USD?

The EUR/USD pair is trading around Friday’s low at 1.0620 after having clocked a session low of 1.06 in Asia. The immediate focus now is on the preliminary November German PMI report due later today.
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