USD/JPY pushes lower to fresh 2-month lows post-FOMC minutes
- December rate hike probability stays unchanged after FOMC minutes.
- DXY refreshes monthly low on the dovish statement.
- USD/JPY's daily loss exceeds 100-pips.
The USD/JPY pair came under a renewed selling pressure in the US afternoon as the minutes of the Fed's November meeting weighed on the greenback. The pair lost 20-pips in a matter of minutes and plummeted to its lowest level since late September at 111.23. As of writing, the pair was trading at 111.25, down 1.08% on the day.
FOMC members voice their concerns over low inflation
Although the statement showed that many participants saw it appropriate for the Fed to make another rate hike in the near-term, the USD caught a fresh selling wave as further details of the statement suggested a cautious stance on further hikes. "Concerns about inflation were widely shared; "many participants" observed that weak inflation could prove persistent and may reflect a drop in inflation expectations," the statement read. At the moment, the US Dollar Index is at its lowest level since October 20 at 93.20 and losing 0.75% on a daily basis.
With American traders getting ready for the Thanksgiving holiday, the DXY could have a difficult time staging a meaningful recovery in the remainder of the week, allowing the pair to consolidate its recent losses in a tight range.
With today's sharp fall, the pair broke below the 200-DMA, which is located at 111.45, and a daily close below that level could keep the buyers at bay. Moreover, the RSI indicator on the daily graph is moving lower towards the 30 mark, suggesting that the bearish pressure is building up. On the downside, the initial support for the pair could be seen at 111 (Sep. 17 low) ahead of 110 (psychological level) and 109.55 (Sep. 14 low). On the upside, resistances align at 111.45 (100-DMA/200-DMA), 112 (psychological level) and 112.70 (Nov. 11 high).