USDJPY: A wild ride today, with more of the same ahead by the look of it by Jim Langlands

US$Jpy has had a highly volatile session today, which is continuing into early Asian trade. The dollar  took a beating in early Europe, and once 117.00 support had given gave way, a sharp selloff to a low of 115.55  ensued, on the back of stops being triggered and position squaring of large yen short positions as well as another selloff in the oil price. The action has since reversed equally sharply and the dollar has since rallied to as high as 117.75 before settling the US session at 117.30, pretty much where it was this time yesterday, but after having left plenty of blood on the street. Early Asian trading has taken the dollar lower once more, currently sitting at 116.35.It is going to remain very choppy as we await for the FOMC result but I would pretty much expect 116.00/117.00 to cover it until then, but the points to watch are at:

On the topside; 117.75/118.00 (117.93: 38.2%of 121.84/115.55) will be the immediate resistances. Above here would head on towards descending trend resistance/100 HMA at around 118.20, a break of which would head on towards 119.00 (200 HM) with further minor resistances to be seen at 119.45 (61.8%) and 120.30 (76.4%).

On the downside, minor support will arrive at 116.00 ahead of today’s session low at 115.55. A break of 115.50 (38.2% of 105.18/121.84) would see a deeper selloff with the points to watch being at 114.87 (12 Dec low) and 113.85 (10 Nov low).

Wait for the Fed, but if they are hawkish and set off another run to the topside in the dollar, then in the longer term I still expect it to eventually recover and to head back towards the recent trend high at 121.84. Beyond there would continue towards the 15 July 2007 high at 122.42. In the longer term, the target of 124.13 (17 June 2007 high) will then appear on the horizon, but will take time, given the resistance levels sitting in between..

Economic data highlights will include:

Trade Balance.

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