USD/JPY: initial bid corrects and bears score a fresh low at 110.90

Currently, USD/JPY is trading at 111.01, up 0.24% on the day, having posted a daily high at 111.47 and low at 110.54.

USD/JPY has dropped after an initial bid post the hawkish FOMC minutes. US 10 year yields initially rallied but are now down 0.15% dragging the dollar lower. However, the minutes were hawkish andw participants judged change to reinvestment policy would 'likely be appropriate' later this year, allowing the balance sheet to shrink.  Fed officials also discussed pros and cons of tapering versus ceasing reinvestment's. The other main takeaways from the minutes were that almost all FOMC members see jobs at or near max employment while Fed officials were still divided over how close inflation was to their goal.

USD/JPY levels

Analysts at Scotiabank explained that the 110 area remains crucial in terms of support. "A break opens up the risk of a push to 108. Bearish momentum signals have moderated and are delivering positive divergence with a failure to confirm the recent lows in spot. DMI’s remain bearishly aligned, along with the short-term MA’s." Meanwhile, a bullish continuation of the recovery would need to push through the 111.50 mark en route to the 112 handle. The recent highs are located at 112.19 while the 4hr 200 EMA is at 112.43 currently with next resistance at the 20th March highs at 112.80.