USD/JPY fades a spike to 112.57 after FOMC minutes
The USD/JPY pair surged to a fresh session high at 112.57 with the initial reaction to the FOMC's September meeting minutes but quickly lost its bullish momentum. As of writing, the pair was trading at 112.44, virtually flat on the day.
The minutes didn't offer anything new to the markets. According to the official statement, many Fed officials saw another rate hike warranted later this year and agreed that they needed to be patient while assessing inflation. Furthermore, the minutes revealed that most policymakers saw wages picking up amid strengthening labor market. On the other hand, many Fed officials were concerned over the possibility that low-inflation may not be transitory.
The US Dollar Index spiked up to 92.94 before starting to retrace its gains and was last seen at 92.84, losing 0.27% on the day. Although the minutes didn't provide any clear signs of hesitation regarding a December rate hike, the probability edged lower to 86.7% from 91.7% according to the CME Group FedWatch Tool.
Technical outlook
Despite that recent fluctuation, the pair preserves its near-term neutral outlook. On the downside, supports could be seen at 112.00 (Oct. 10 low/psychological level) ahead of 111.40 (200-DMA) and 110.75 (50-DMA). On the upside, resistances align at 112.45 (20-DMA), 113.45 (Oct. 6 high) and 114.50 (Jul. 11 high).
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
