USD/JPY: Bulls defend the 108.80s despite Fed related pull-back

• USD and yields jumps but then reverses on the Fed.
• USD/JPY supported by the 200-hour moving average with price tucked into the 108.80s. 

USD/JPY has been up to test the confluence of the 21 and 50-hour moving averages, however, the pair consolidates in the main following a vicious spike overnight on the back of the Federal Reserve interest rate decision, supported by the 200-hour moving average to the downside as price stays tucked into the 108.80s. 

Indeed, the main event has stayed with the Fed, however, it could come as a disappointment down the line for stocks, should there be no further rate cuts for the year. Indeed, the Fed cut the funds rate 25bp as expected but did not tip the hat for further hikes, instead, making a change to the statement that indicated that the central bank is now data-dependent.

As a result, the USD and yields jumped but then reversed during the Powell press conference. US 2-year Treasury yields jumped 6 basis points to 1.67% before sliding back to 1.60%, -4 basis points for the day. Subsequently, USD/JPY popped to 109.29 – as being a three-month high before moving back to 108.85, flat on the day. 

US data on the up

As for other US data, analysts at Westpac explained:

"US Q3 GDP slipped from 2.0% to 1.9% annualised but was above expectations of 1.6%, supported by a stronger consumer. In y/y terms (Q3 19 vs Q3 18), growth slipped to 2.0% from 2.3%. Personal consumption rose 2.9% (est. 2.6%), with particularly strong personal durable goods purchases of 5.4%. Core PCE inflation rose to a 2.2% pace from 1.9%, as expected. The ADP private payrolls survey rose 125k in Oct (vs est. 110k), but the prior reading was revised down from 135k to 93k."

USD/JPY levels