USD/JPY Remains bullish despite the dovish Fed

It’s all about Fed today. As widely expected the Central Bank left the interest rate unchanged but markets took their time to react on the dovish statement before the US Dollar dropped.

Well it’s hard to define the future as know or unknown. The Fed didn’t say that the outlook has improved. If the prospects are not better, there is no reason to accelerate increasing rates. Also  chances for a June hike after the statement seem to have disappeared. On the other hand the use of moderation word, copied from the ECB President Mario Draghi is a way to describe the slowdown. Meanwhile the US dollar gained strength during the past weeks and the hours before FOMC and this comes along with rising bond yields. This combination of fact and words after all pushed the greenback lower but it seems that this would be short lived.

USD/JPY fell to 109.60 as a reaction of Fed’s decision but then bounced to currently trade at 109.95. Technically speaking the short-term outlook remain neutral to bullish. On the four hour time frame the price is developing above its bullish moving averages.RSI and stochastic retreated from their extreme overbought areas although remain flat within the positive territories. 

As long as the pair holds above 109.00 handle, the trend favors the upside with next target for the bull at 110.00, which if broken to above would open doors for testing the February’s hi at 110.45.