- DXY retreats after FOMC minutes, still holds to daily gains.
- USD/JPY recovery losses momentum as US yields turn lower.
- Japanese yen remains the top performer of the day.
The USD/JPY pair tested session highs at 110.30 but failed to break higher and turned south moving to 110.00. It was trading at 110.05/10, far from the lows but still showing the worst daily performance in weeks.
The greenback pulled back across the board after the release of the FOMC minutes of the May 1/2 meeting. The central bank sees another rate hike likely “soon”. FOMC members mentioned that inflation above the target for some time could be helpful. The minutes contained no surprises and market expectations for a June rate hike remained high.
The yen gained momentum against the US dollar as US yields dropped toward daily lows. At the same time US equity prices trimmed losses and gold rebounded.
Technical outlook
“The pair is recovering above the daily ascendant trend line and the 100 SMA in the 4 hours chart, both pierced early Europe. Technical indicators in the mentioned chart have managed to bounce from overbought levels, but are rather reflecting the ongoing correction than suggesting more gains ahead”, said Valeria Bednarik, Chief Analyst at FXStreet.
She warns that if the pair manages to extend its recovery beyond 110.45 (May 15 high) “chances are of further recoveries ahead for the upcoming sessions.”
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