USD/JPY decline extends below 100.50 post-FOMC

The downside pressure around the greenback is now picking up pace, with USD/JPY now testing fresh lows in the vicinity of 100.30.

USD/JPY still depressed near daily lows

Spot keeps the downbeat tone intact today, almost exclusively due to the BoJ and another disappointment at today’s meeting, as its announcements have come in short of market expectations, giving extra wings to the safe haven JPY.

On the USD-side, the Federal Reserve matched consensus, leaving its rates unchanged at 0.25%-0.50%. Members voted 7-3 favouring current monetary conditions, with Mester, Rosengren and George on the dissenters’ camp.

The Fed’s statement has reiterated previous Fedspeak comments that the case for a rate hike has strengthened albeit the Committee needs to see further evidence before hiking.

Members have updated the ‘dot plot’ and now see 2 rate hikes during next year vs. 3 previous. In the same line, the Committee has lowered its GDP forecast for the current year to expand by 1.7%-1.9% from June’s 1.9%-2.0%.

USD/JPY levels to consider

As of writing the pair is losing 1.13% at 100.55 facing the immediate support at 99.53 (low Aug.16) followed by 99.08 (low Jun.24). On the other hand, a breakout of 102.78 (high Sep.21) would open the door to 103.36 (high Sep.14) and finally 104.33 (high Sep.2).