USD/JPY prints fresh 6-week highs after FOMC statement

The Japanese yen lost momentum after the Fed’s decision to leave monetary policy unchanged. As expected, the central bank, left interest rates unchanged, following a 2-day policy meeting, at the range 0.75% - 1.00%. In the statement, the FOMC said that the slowdown in the economy during Q1 is likely to be transitory. They repeated that if the economy evolves as expected, it would warrant gradual rate hikes. 

Fed leaves interest rates unchanged at May meeting

US bond yields rose after the statement and boosted the USD/JPY pair to fresh weekly highs. It broke above 112.50 and recently printed a new high at 112.70, the strongest since March 21. It remains near the highs headed toward the fifth daily gain in a row. 

Equity prices in Wall Street tuned to the upside after the decision, erasing most losses. The Dow Jones is up 0.06% while the S&P500 falls 0.09%.  In the bond market, the 10-year yield rose from 2.29% to 2.32%. Gold prices fell sharply, from above $1250 toward $1240. 

With holidays ahead in Japan, attention is likely to start turning from the Fed toward the NFP report. 

Technical levels 

To the upside, resistance levels could be seen at 112.70 (daily high) 112.85/90 (Mar 16 low / Mar 20 & 21 high) and 113.25. On the downside, support could be located at 112.50 (previous high), 112.30 (May 2 high / 20-hour moving average) and 111.95 (daily low).