A triple-top formation or a breakout to fresh highs since 1990? That is what awaits USD/JPY as we look towards the FOMC meeting decision later in the day.

The dollar is trading firmer across the board in European morning trade, as it seems like traders are positioning for a more hawkish hold by the Fed later. Are we that confident of a shift in the dot plots from 75 bps to 50 bps? And will that even matter at the end of the day? I shared some food for thoughts on that earlier here, alongside a list of previews.

But for now, the dollar continues to trade with more poise backed by the run higher in Treasury yields over the past week or so.

Going back to USD/JPY, we have to circle back to the first question. That’s the only thing that really matters now for the pair. The post-BOJ reaction hasn’t gone so well for yen bulls but if they are to step in, the top around 151.90-94 will be no better time to prove their mettle.

Otherwise, a break to the highest levels since 1990 will see little technical resistance on the way up. The April 1990 high stalled just above the 160.00 mark and that is plenty of breathing room from here up until there.

That being said, there is the prospect of intervention by Tokyo if we do see a major breakout to the topside. So, just be wary of that. However, it’s been surprising to see how quiet they have been over the last two days since the BOJ policy decision. Are Japanese officials perhaps weighing the prospects of imported inflation benefitting their agenda shift? That might be something to consider as well.

This article was written by Justin Low at www.forexlive.com.