USD/JPY gains traction after knee-jerk drop post-FOMC

The USD/JPY pair quickly dropped to a fresh session low at 113.06 after the FOMC released its June meeting minutes but easily reversed course, gaining more than 30 pips in a matter of minutes. At the moment, the pair is trading at 113.40, up 0.09% on the day.

The minutes from the June (13rd & 14th) Federal Reserve’s monetary policy meeting revealed that several policymakers thought that the recent increase in import prices was consistent with the medium-term inflation expectations. Furthermore, almost all of the members supported the rate hike decision and most of them blamed soft prices on 'idiosyncratic factors'.

• FOMC Minutes: Policymakers saw recent increase in import prices as consistent with inflation trend in medium term

The US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, leaped to 96.17 and is now at 96.14, up 0.15% on the day, suggesting that investors assessed minutes as USD positive. However, considering the range of the movement, it's still early to say that the DXY is in an uptrend.

Technical outlook

112.60 (200-DMA) remains as a tough support to crack for the pair. 112.00 (psychological level) and 111.55 (50-DMA) could be seen as the next technical support levels in case the 200-DMA is brokern. On the upside, resistances align at 113.70 (daily high), 114.35 (May 10 high) and 115 (psychological level).