Below the 100 and 200 hour MA
The USDJPY has fallen to new NY session lows. That retraces the gains from the much better than expected ADP report. The fall in the stock market is a contributor. The Nasdaq composite index is now down -21 point after being up up about 34 points at the highs.
The FOMC minutes were foggy, but did suggest the Fed would look to lower the 4.5T balance sheet. If they did that there would be no more carry profits for the worlds largest bond portfolio. That should raise the US deficit (well it would be lower. They make good money on the bond portfolio and remit profits to the treasury). Don't worry, I don't think it would be much of an impact.
Despite the threat of being less of a contributing bond buyer (and potentially a seller), the 2 year is now down -2.0 bp. HMMM. If the Fed is not a buyer anymore and potentially a seller, wouldn't that raise rates? Markets are a bit confused and perhaps trading the price action and technicals.
For the USDJPY, the price is now unchanged on the day (110.72 was the close). We currently trade at the closing level. The pair has moved into a support area defined by swing levels going back to March 22 (see yellow area in the chart above). A trend line is also being tested near current levels.
SO there is some support. Stocks seem to be wagging the dog (the Fed did comment on stocks being "quite high". I am a bit confused about the interest rate move but I don't fight the price action. For dip buyers the 110.61 -72 should provide support for the USDJPY for a trade, but it would just be a buy the dip trade.
