USD/JPY finds support ahead of 113, waits for FOMC minutes

After touching its highest level since mid-May at 113.70, the USD/JPY came under pressure in the first half of the NA session and erased its daily gains. At the moment, the pair is trading at 113.25, losing 0.03% on the day.

Although the demand for the USD remains high on the day, with the US Dollar Index comfortably holding above the 96 handle, the pair is having a difficult time gathering further bullish momentum. The geopolitical tension around the North Korea situation is taking a toll on the risk appetite, pushing the investors to safer assets like the JPY.

• US Dollar retreats from tops, still above 96.00

Earlier in the day, North Korea claimed that the ICBM (intercontinental ballistic missile) that was tested was capable of carrying a large nuclear warhead. Moreover, according to Reuters, a spokeswoman for the U.S. Defense Department said that they believed the missile to have the range to reach Alaska and the Pacific Northwest of the United States. To assess the situation, the U.N. Security Council will be holding an emergency meeting later in the day at 19:00 GMT.

• N.Korea to test an ICBM that can hit the US mainland within this year - UOB

The FOMC is scheduled to release its June meeting minutes at 18:00 (GMT), which could be the next catalyst for the pair. However, even if an unexpected hawkish tone provides a boost to the greenback, the JPY could stay resilient as the uncertainty with North Korea continues. On the other hand, if a greenback sell-off is triggered, we could see the pair quickly erasing a big portion of its weekly gains.

• When are the FOMC minutes and how could they affect DXY?

Technical outlook

The pair could face the initial support at 112.60 (200-DMA) ahead of 112.00 (psychological level) and 111.55 (50-DMA). On the upside, resistances could be seen at 113.70 (daily high), 114.35 (May 10 high) and 115 (psychological level).