USD/JPY under pressure below 112 post-FOMC

The USD/JPY pair, which jumped to 112.15 with the initial knee-jerk reaction to the FOMC statement, quickly erased its gains and dropped below the 112 mark to refresh its daily low at 111.54. As of writing, the pair is trading around the 111.64 area, losing 0.22% on the day.

Following its 2-day meeting, the Federal Reserve, in line with market expectations, decided to keep interest rates unchanged at its current target range of 1.00% - 1.25%. In the press statement, the Committee reiterated that it was expecting inflation to remain somewhat below 2% in the short-term but stabilize around its 2% objective in the medium term. The statement also included identical quotes from the June meeting statement, such as "job gains have been solid, household spending and business fixed investment have continued to expand." 

• Fed leaves interest rates unchanged at July meeting

Regarding the balance sheet reduction, instead of using the phrase "later this year," the Committee said that it was going to start implementing the normalization program "relatively soon," but failed to give a specific time-frame. The US Dollar Index reacted negatively to the statement and plummeted towards the mid-93s. At the moment, the index is at 93.56, losing 0.38% on the day. 

Technical outlook

111.40 (100-DMA) could be seen as the first technical support ahead of 111 (psychological level) and 110.60 (Jul. 24 low). On the upside, resistances align at 112.00 (psychological level), 112.75 (200-DMA) and 113.55 (Jul. 14 high).