USD/JPY: can the bulls finally get away from the 50-D SMA on FOMC minutes?
- USD/JPY: breaks higher despite sour risk tone.
- USD/JPY needs to break away from the 50-D SMA anchoring the bids.
USD/JPY has popped sharply higher now that the market has digested the FOMC minutes to be more hawkish than at first thought. Currently, USD/JPY is trading at 107.05, down -0.14% on the day, having posted a daily high at 107.27 and low at 106.65.
FOMC minutes: a more hawkish bias in these minutes
USD/JPY spiked from 106.80 to 107.04 on the minutes:
- Almost all agreed gradual rate hikes appropriate.
- All agreed economic outlook had strengthened in recent months.
- Strong majority agreed prospect of retaliatory trade actions by other countries as downside risk for US economy.
- Despite expectations for rising y/y inflation, policymakers agreed that alone would not justify change in projected rate hike path.
- Several said Fed funds rate will likely need to be above long-term normal rate for a time.
- Some said future Fed statements might need to signal that policy will shift to being a neutral or restraining factor for the economy.
USD/JPY has been under fire with the sounds of war emulating from the ME and the Trump administration, an all too familiar drum beat but nevertheless, one that the markets have been paying attention to today, just as Trump/china risk began to soften. Russia is causing concern with their recent pleas with the US to not pursue military action in Syria and that spells conflict.
USD/JPY levels
The 50-D SMA keeps the USD/JPY anchored while the dollar attempts to break through and get above the 27th March and mid-Feb highs. Eyes focused on the upside look to the 110.48 February highs. On a continuation of the downside, however, (geopolitics), 105.50 ahead of 104.20 gives way to a downside measured target of 102.58, guarding a run to 101.19/99.00 as the June-to-November 2016 lows ahead of 100.70/99.00.