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  • USD/JPY making a break tot he upside, currently trading at 111.58, up from a low of 111.35 and making a high, so far, of 111.61.
  • Greenback picking up a bid in Tokyo.

The DXY has firmed from 96.38 by 10 points and risk-FX, such as the Aussie, are taking the brunt  of the move while the yen gives back some ground following a subdued session in North America.  

USD/JPY was down at 111.35 by late NY, barely lower overall while G10 currencies, as a whole, were  muted ahead of the FOMC meeting outcome, with net movement on the day no larger than 0.25%. As for yields, the 10 year US Treasury yield traded 2.59% to 2.63%, steadying around 2.61%, while the 2 year yield rose 3bp to 2.47% – The Fed funds futures price roughly a 25% chance of a rate cut by year-end.

  • BoJ Minutes 23-24 Jan meeting: Appropriate to continue easing persistently

Fed outlook:

“The outcome of the FOMC meeting is due 2pm local time, 5am Thursday Sydney. That is when we will see the rigidly formatted statement which should remain mostly upbeat on the US economy as the funds rate is kept at 2.25-2.50%, but probably more importantly for markets; we will also see the quarterly Summary of Economic Projections,” analysts at Westpac explained.  

USD/JPY levels

Valeria Bednarik, the Chief Analyst at FXStreet, explained that the pair remains stuck to converging 100 and 200 SMA in the daily chart, while technical indicators hold right above their midlines, suggesting that the upward potential is still limited:

“Shorter term, however, the 4 hours chart shows that the risk of a bearish turn remains high, as the pair is struggling to hold above the 100 SMA which anyway maintains a bullish slope. Furthermore, technical indicators recovered from their intraday lows, but quickly lost upward strength, still developing within negative levels. The risk of a downward extension will increase if the pair loses the 111.00 mark, more likely in the case the US Federal Reserve disappoints more than anticipated.”