USD/JPY: bears are eyeing 105.60 again

• Powell doesn’t convince USD bulls as DXY is below 90.00.
• USD/JPY stays is the 105.60-107 range. 

The USD/JPY is trading at around 105.94 down about 0.50%. The Fed disappointed the market as it raised rates 25bp as it was widely expected but the dot-plot says that there are only two more rate hikes in store for 2018 versus three anticipated by the market. 

The growth forecast for 2018 was upgraded from 2.9% against 2.7% previously and 2019 forecast is now set at 3.4% versus 3.1% previously. In the long-term, the upgrade was minimal: from 2.8% to 2.9%. The Fed did hike but it is as though they did it unwillingly, at least that is what the market´s reaction reflects by selling the USD across the board with the US Dollar Index trading now below the 90.00 mark. 

During the press conference, Powell said that “nothing in the data indicates that inflation is about to accelerate” and the remark did accelerate the USD selling against the Euro, the Pound, the CAD, NZD and AUD. However the Japanese Yen is the one which has contained USD losses the more within the major pair with only 0.50% loses so far, although the day is not over yet. 

Coming up in the Asian session, Japan will publish the March preliminary Nikkei PMI, expected at 54.3 from a previous 54.1, alongside with the January All Industry Activity Index for February, seen down 1.7% from a previous 0.5% advance.

USD/JPY daily chart

The Yen is probing  yesterday´s low. The bulls will try to defend the level, however, with the DXY selling pressure, it is unclear if the support will be able to hold for long. 

USD/JPY 1-hour chart

There is objectively little in the way to see a test of 105.60 support. If the market cannot provide support there, 105.40 and ultimately 105.30 (prior swings) should provide support. Resistance is seen 106.20 supply level followed by 106.60 a triple top.