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USD/JPY in wake of FOMC statement

 

USD/JPY - open way to 113.00

Today markets were in fact dominated by much better US data, the dollar was strong across the board on the expectation of a Fed hike as soon as June. The Central Bank left rates unchanged while maintaining the overall positive outlook for the local economy. The bottom line is the Fed still sees economic activity, the labor market and inflation on course with its expectations and is looking to hike interest rates at its June meeting. The odds of a June rate hike have risen to over 90 percent and the odds of another move later this year have risen to around 40 percent. The USD/JPY pair advanced up to 112.76, its highest since March 21st. Strong US data released earlier on the day and a modest recovery in US Treasury yields had the positive influence on the USD/JPY. US Treasury yields and risk sentiment have been leading the way for most of the past two months, and beyond today's reaction to Fed's further gains on the pair will continue depending on those two factors. Governor Kuroda comments had the negative influence on Yen, he intends to maintain quantitative easing in place, even in the economy grows above its potential. According to Kuroda, a strong yen will likely delay reaching the 2% inflation goal.

USD/JPY remains closely correlated to US Treasury yields, which have been volatile in recent weeks. The pair has the open way to 113.00, if the price jumps above this line (resistance level on the chart) it would be "BULLISH" confirmation and the open way to 114.00 level. Short-term support levels might be located around 112.00 level. For now, USD/JPY is more "BULLISH" as long as the price remains above 112.00.

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