USD/JPY nears pares losses
The US dollar is now down just 33 pips to 119.95 after falling as low as 119.23 at the start of US trading.
The pair found bids ahead of last week's low of 119.08 and has made a comeback as stock market sentiment improves. The S&P 500 has pared its loss to 5 points from as may as 30 points.
The underlying dynamic in USD/JPY remains uncertain. A clear consolidation/wedge pattern has emerged in the aftermath of the August mini-panic and the market isn't sure yet which way to go. In a pattern like this, the odds favour the downside but the trade is always to go with a break in either direction.
I expect it will be less than a week before it finally breaks.
The good news for the bulls is that stock market selling post-Fed didn't knock out downside support, that's a good sign for a potential break to the upside if equity markets can continue the late US momentum.