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The USD/JPY pair hovers near a daily low of 107.27 and could extend the slide once below 106.95, according to FXStreet’s Chief Analyst Valeria Bednarik while the Federal Reserve’s decision on monetary policy put market players on guard.

Read: Fed Preview: Nine major banks expectations

Key quotes

“The Fed will likely keep its monetary policy unchanged, but will also present its economic projections for the first time ever since the coronavirus crisis began. Policymakers’ view on growth, inflation, and employment levels will set the tone for financial markets, eager to get some clues about when and how the economy will start picking up.”

“USD/JPY is bearish according to the 4-hour chart, as it has broken below all of its moving averages, piercing the 200 SMA for the first time in June.” 

“Technical indicators, in the meantime, have decelerated their slides, but remain within oversold levels and with no signs of changing direction. It’s all about the Fed today, and the market could change course without notice. Still, a break below 106.95 should open the doors for a steeper decline.”

“Overnight, Japan published its May Producer Price Index, which fell by 2.7% YoY, worse than anticipated. Also, Machinery Orders fell by 12% MoM in April and were down by 17.7% when compared to a year earlier.”

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