USD/JPY rises above 144.60 after FOMC minutes
- USD/JPY jumped above 144.60 after hitting a daily low of 144.07 earlier in the session.
- Minutes from the June FOMC meeting revealed that some participants supported a 25 bps hike.
- Rising yields made the USD gain traction.
On Wednesday, the USD/JPY trades with gains as the USD gained interest after the Federal Open Market Committee (FOMC) minutes from the June meeting revealed a hawkish stance from its members as some of them supported a hike. As a reaction, the shorter-term Treasury bond yields from the US rose as markets expect a more aggressive Federal Reserve (Fed).
FOMC minutes from June’s meeting revealed a hawkish stance from its members
According to the FOMC minutes from the latest June meeting, members of the Committee supported the case of hiking by 25 basis points, driven by a tight labour market. However, the ultimate decision was to hold rates steady, as Jerome Powell considered it necessary to assess the effects of monetary policy on the US economy.
In addition, the minutes revealed that all participants agreed that maintaining a restrictive stance would be appropriate. It's worth noticing that the dot plots in the last monetary policy statement showed that members are seeing the terminal rate peaking at 5.50% this year, meaning that they foresee an additional 50 bps hike. As a reaction, the reassurance of the aggressive stance of the Fed members fueled the US bond yields, with the 2, 5 and 10-year yields showing gains of 0.50-2% following the release of the minutes.
That being said, investors will eye the release of ADP Employment change data on Thursday and Non-Farm Payrolls on Friday to continue modelling their expectations regarding the next Fed meeting.
USD/JPY Levels to watch
According to the daily chart, the technical outlook for the USD/JPY is bullish for the short term. However, indicators are losing steam, with the Relative Strengh Index (RSI) correcting overbought conditions and the Moving Average Convergence Divergence (MACD) printing decreasing green bars.
Support Levels to watch: 144.00, 143.70,143.30
Resistance Levels to watch: 144.90, 145.00 (psychological mark), 145.07 (June 30 high).
USD/JPY Daily chart
