USD/JPY extends bounce from 130 handle ahead of FOMC minutes
All eyes are on the release of FOMC's December meeting minutes, due later on. Ahead of that, the US dollar is trading mixed. Commodity dollars are sharply higher despite crude oil sell-off, while the yen is weaker despite a firmer tone in the stock markets.
At the December meeting, the FOMC reduced the pace of tightening to 50 basis points but appeared more hawkish than expected, in that policymakers projected a higher terminal interest rate and indicated that monetary policy will remain contractionary for longer. The minutes should reveal more details, which should set the tone for next few days at least.
For the USD/JPY to gain further traction, we will need to see a higher high above 134.50 in the coming days. Otherwise, this two-day recovery should be taken with a pinch of salt, given the dollar's poor performance in recent months. We need to see some sort of confirmation that the USD/JPY has bottomed.
However, if the USD/JPY reverses and goes back below yesterday's hammer candle around 131.40, then that could see renewed selling pressure come into the market as the bulls rush for the exits again.
At the December meeting, the FOMC reduced the pace of tightening to 50 basis points but appeared more hawkish than expected, in that policymakers projected a higher terminal interest rate and indicated that monetary policy will remain contractionary for longer. The minutes should reveal more details, which should set the tone for next few days at least.
For the USD/JPY to gain further traction, we will need to see a higher high above 134.50 in the coming days. Otherwise, this two-day recovery should be taken with a pinch of salt, given the dollar's poor performance in recent months. We need to see some sort of confirmation that the USD/JPY has bottomed.
However, if the USD/JPY reverses and goes back below yesterday's hammer candle around 131.40, then that could see renewed selling pressure come into the market as the bulls rush for the exits again.
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