USD/JPY: targetting the highs and 114 handle following FOMC

  • USD/JPY has popped higher on the FOMC.
  • USD/JPY has started to bleed a little following the FOMC whereby the Federal Reserve has left rate on hold at 2.00-2.25% as expected. 

USD/JPY has been better bid as G10FX continues to chop higher in dollar terms post the midterm elections while US stocks continue to elevate the EURJPY cross and dollar higher. USD/JPY remains buoyant with a risk on mood while Wall Street went bid on the results. The pair has been rising from 113.47 early to 113.69 overnight, falling  just shy of yesterday's 113.82 spike. Today, the pair has kept up the momentum and bulls target the 114 handle following the FOMC while U.S. yields remain firm again, although holding below recent highs, with ten-year Treasuries above 3.22%. 

FOMC key takeways:

  • Economic activity rising at strong rate; growth of business fixed investment has moderated from its rapid pace earlier in the year.
  • Inflation remains near 2%, l-term inflation expectations little changed.
  • Expects further gradual hikes to be consistent with sustained economic expansion, strong jobs market and inflation objective.
  • -Repeats near-term risks to the economy appear ‘roughly balanced.

USD/JPY levels

Analysts at Commerzbank explained that USD/JPY remains bid and they look for further gains to the 114.74 recent high. 

"Above 114.74 would target 118.66, the December 2016 high. The market is underpinned by the 55 day ma (112.40) and cloud support (112.93/15). Only failure at the cloud support (112.15) would target the 109.77/110.00 200 day ma and August low. Where are we wrong? If the 109.77 level were to give way (August low), the June 8 low at 109.20 would be in focus. Failure there would imply a slide back to the 108.12 May 29 low and the mid-February high at 107.91."

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