USD/JPY: We’ve seen some USDJPY profit-taking on longs above 108 ahead of the FOMC decision later this week, but as soon as the pair nears its breakout level from last week at 107.60/70 it holds in well again. We look to play this range, with the topside at 108.30/40 for now.
AUD/USD: had a quiet start to the week, holding its gains after having broken above the short-term down trendline from last week and dealing up to a high of 0.8825. Without any major data this week from Australia the focus is fully on Wednesday’s FOMC decision. We could see few more short positions being reduced on the runup to it, but would take that opportunity to establish fresh shorts, ideally between 0.8890 and 0.8940 with a stop above 0.9030, targeting a retest of 0.8650 level.
NZD/USD: has likewise been bid, and topping out in the same area as on Friday. The RBNZ is due on Wednesday; we expect the OCR review to sound dovish while emphasizing wait-and-watch, rather than being definitive about an extended pause. Sell rallies to 0.7910/30, the pre-CPI levels, with a stop above 0.8050.
UBS