- The USD/JPY trades around the mid-point of the daily range, around ¥106.60.
- The Monetary Policy Report from the Fed expresses optimism but does not provide hints about future monetary policy.
- The pair continues tracking US bond yields.
The USD/JPY has risen from the daily low of ¥106.51 but remains down some 80 pips on the day. The pair reached a high of ¥107.13 before turning lower to the current levels of ¥106.60. US 10-year Treasury yields fell from the highs of the week to below 2.90%, weighing on the US Dollar. The correlation between the two remains solid.
The Federal Reserve released its Monetary Policy Report. The document that precedes the highly anticipated testimony by Fed Chair Jerome Powell on Tuesday. The report continues stressing a gradual path of rate hikes, with no immediate need for an acceleration. Inflation is set to near 2% later this year. However, the report notes that wage rises do not indicate labor shortage.
Earlier in the day, Japan's inflation report showed a slightly higher than expected headline CPI at 1.4% but no change on Core CPI at 0.9%.
USD/JPY Technical Picture
The USD/JPY may find immediate support at the low of ¥106.51. The next line is the round level of ¥106.00 which served as support. The 15-month low of ¥105.55 is next.
On the topside, ¥107.13 is followed closely by ¥107.30, the September low, and by ¥107.90, the high seen earlier this week.
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