• USD/JPY prints mild losses as markets turn dicey ahead of the key events.
• 200-DMA, four-month-old support line defend buyers amid bullish MACD signals.
• Sellers remain hopeful unless witnessing a clear break of 138.00 hurdle.

USD/JPY struggles to defend the bounce off the 200-DMA as it seesaws around 135.50 during early Wednesday morning in Europe. In doing so, the Yen pair portrays the market’s cautious mod ahead of the key Federal Open Market Committee (FOMC) monetary policy meeting.

Also read: Fed December Preview: Will US Dollar selloff continue?

It’s worth noting that the looming bear cross on the MACD and multiple hurdles to the north keeps the USD/JPY bears hopeful.

That said, the quote dropped the most in two weeks while reversing from a one-month-old horizontal resistance area comprising a downward-sloping resistance line from October 21, the 21-DMA and multiple tops marked since November 15, around 137.70-138.00.

Hence, the USD/JPY pair’s weakness below the 200-DMA level surrounding 135.35 appears imminent. In that case, an ascending support line from early August, near 133.90, will gain the market’s attention.

Should the Yen pair breaks the 133.90 key support, it becomes vulnerable to challenge August month’s low near 130.40.

Alternatively, an upside clearance of the 138.00 hurdle could recall the USD/JPY bulls targeting the late November swing high of 142.25. During the run-up, the 140.00 threshold may act as an intermediate halt.

Overall, USD/JPY is likely to decline further but the downside appears limited.

USD/JPY: Daily chart

Trend: Limited downside expected