USD/JPY rises above 114 after FOMC releases policy statement
- FOMC leaves policy rate unchanged at November meeting.
- Market reaction stays limited with no press conference scheduled.
- DXY rises towards daily highs following the initial negative reaction.
With the knee-jerk response to the FOMC decision, the USD/JPY pair edged down to the 113.80 region before reversing course and advancing above the 114 handle. At the moment, the pair is trading at 114.05, adding 0.35% on the day.
No surprises from the Fed
At the end of its two-day meeting, the Federal Reserve announced that it decided to keep its policy rate steady at its current target range of 1.00% - 1.25%. In its statement, the FOMC said that the balance sheet process initiated in October was proceeding as planned and the economic activity has been rising at a solid pace despite the negative impacts of hurricanes. The Committee further added despite a rise in September amid higher gasoline prices, core inflation remained soft.
- Fed meeting: Interest rates unchanged at November meeting
- FOMC statements: Comparison between September and November
After dropping to mid-94s in the first couple of minutes following the announcement, the DXY easily retraced its losses to rise back to the pre-FOMC levels. At the moment, the index is at 94.70, up 0.28% on the day.
Technical levels to consider
The first technical hurdle aligns at 114.50 (Oct. 27 high) ahead of 115 (psychological level) and 115.50 (Mar. 10 high). On the downside, supports are located at 113.60 (daily low), 113 (psychological level/20-DMA) and 112.30 (Oct. 19 low).