USD/JPY stuck below Kijun resistance, FOMC puts nail in coffin
- USD/JPY: consolidating the FOMC volatility below 106 handle.
- USD/JPY: yen on top as dollar takes a whack on dop plot disappointment.
USD/JPY has opened in Tokyo as Japan returns to the aftermath of the FOMC, currently, trading at 105.95, down -0.09% on the day, having posted a daily high at 106.10 and low at 105.8, following a NY of low of 105.87.
The dollar came under pressure as soon as markets covered wrongly footed bets on a dot plot that would indicate four hikes before the year was out. Instead, it was further out where the 2019 median increased to three hikes from two, capturing the newfound emphasis on "further" gradual hikes while the long-run rate drifted to 2.875% from 2.75% as analysts at Westpac pointed out, adding:
"In the subsequent press conference, perhaps the most market-sensitive quote from Fed chairman Jay Powell was that there is “no sense” in the data that we are on the cusp of an acceleration in inflation. This looked to have cooled US yields and USD after an initial bounce."
US yields bought a return ticket in FOMC volatility
In respect to yields over the event, the benchmark 10 year Treasury yield climbed from 2.89% to 2.93% before a return ticket was issued back to 2.89% after the press conference. The New York price was also volatile around the FOMC, although remained contained below the Kijun resistance and consolidating tucked in towards the 106 handle.
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USD/JPY levels
Jim Langlands, FX Charts, explained that technically, the daily momentum indicators still look mildly constructive:
"If we manage to break above 106.60, a test of the descending trend resistance at around 106.75 may be on the cards. Above here could stretch to 107.00 and then to 107.30/40."
Bearishly, Valeria Bednarik, chief analyst at FXStreet adds,"The 4 hours chart shows that the pair is back below its 100 SMA, and while technical indicators pared declines, the Momentum stands in neutral territory and the RSI around 42, skewing the risk toward the downside, with the market eyeing 105.24, the multi-month low set last February."