USD/JPY - It's time for a pullback!

The Federal Reserve Bank gave investors a strong reason to continue buying U.S. dollar this past week by raising interest rates for the second time in the decade and signal three rate hikes in 2017, from two the previous forecasts. Moreover, Fed Chair Yellen called the expectation for three rate hikes into next year as a ‘modest adjustment’ and drove the USD/JPY pair towards a new 11-month high at 118.65.

This week the U.S. GDP growth, the personal consumption expenditures, and the durable goods orders will affect the currency, as well as the Bank of Japan interest rate decision today overnight. However, no changes are expected from the current -0.1% interest rates.

Over the last six months, the pair is moving with an aggressive move and surged more than 13% with nothing being an obstacle for recording multi-month high. The pair rose 2.24% last week and bounced off the 118.65 resistance level. Currently, it is trading near the 117.30 price level and is approaching the 116.10 support barrier. On the other side, a penetration of the previous high will expose the price towards the 120.00 psychological level. On the daily chart, the 100-SMA is moving upwards and crossed above the 200-SMA indicating a strong momentum. However, the technical indicators are sloping downwards while both are still holding in a positive territory. The MACD oscillator is moving lower against the previous periods, as well as the RSI indicator is ready to get below the 70 level.