The U.S. Federal Reserve expected to hike interest rates
Traders and investors alike are bracing for another 25 basis points rate hike from the U.S. Federal Reserve today. This will effectively put the U.S. short term fed funds rate in the range of 0.75% - 1.00%. The increase in the interest rate comes as the U.S. economy continues to show heightened economic activity while inflation has also become firmly anchored above the Fed's 2.0% inflation target rate. The markets are heading into today's FOMC event with over 80% probability of a rate hike today.
Today's Fed meeting
Today's Fed meeting could have widespread implications for the EURJPY as the single currency and the Japanese yen head into a high impact event. For the euro, the Netherlands are heading to the polls today which could be an additional overhead risk for EURJPY, while the BoJ's meeting looms.
Traders in particular will be looking to the updated dot plot from the Fed which could forecast where the short term interest rates will be by the end of the year. The Fed is also expected to release its updated forecasts at today's meeting which could be a market moving event. Following the rate hike, the Fed Chair, Janet Yellen will also be speaking during the press conference.
Taking into account the above factors, the EURJPY could be seen coming under pressure alongside other major currency pairs as well. For EURJPY, the volatility will continue beyond the FOMC meeting with the Dutch voting and tomorrow's BoJ interest rate decision (no changes are expected from the BoJ at tomorrow's meeting).
How we trade binary?
EURJPY is tipped to decline in the near term as price is seen bouncing off 121.685, which marks the measure move target from the descending triangle pattern. Expect EURJPY to retest the broken support at 122.250 to establish resistance. Thus, purchase daily PUT options near 122.25 for a 21:00 GMT expiry time as EURJPY could be seen extending declines down to 121.135.
Target price: 122.25
Expiry: 21:00 GMT