USD/JPY: 110 breached on FOMC minutes, what now?

USD/JPY has been in consolidation in the main since the rally in the greenback and US rates shooting high on the prospects of a Fed hike in June.

The FOMC minutes were the main catalyst overnight that took the dollar higher across the board as most members were sighting that June would be an appropriate time to time rates providing data was solid. “Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen, and inflation making progress toward the Committee's 2 percent objective, then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June.”

However, the yen was under pressure yesterday in Asia as well on the back of Japanese Q1 GDP surprised to the upside, taking out some of the immediate pressure over the BOJ to add stimulus. A technical recession was avoided with the economy growing by 0.4% against expectations of a 01%.

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart, "Indicators also head higher within positive territory, although the moving averages maintain their bearish slopes. If the rally extends, the level to watch is 110.60, a major static resistance that needs to be broken to confirm a more sustainable recovery in the mid-term".