There is no doubt that the minutes of the last Federal Reserve meeting helped the USD to achieve gains against other majors, and the effect on the USD/JPY was a move towards 112.72 level, after stopping losses around support level at 112.05, and the Federal Reserve maintained the plan of 3 interest rate raise for 2018. The minutes suggested that the low inflation level in the country is transitional and that the job market strength will support facing its implications. The decision makers at the Federal Reserve agreed largely last month that the US tax reform would benefit the economy, however, they split in terms of whether the resulting growth will lead to faster rate raise this year.
Expectations are more than 98% that the Federal Reserve will increase the rates this month. Before the release of the minutes, the US Industrial ISM recorded a new record level against expectations, and the constructions spending increased strongly as well.
The USD/JPY will have strong bearish move in case it moved towards support at 112.00 and 111.60, and we still prefer buying at each bearish bounce. On the bullish side, the nearest resistance levels are currently at 113.10, 113.75 and 114.30. The daily chart shows clearly a break of the bullish trend lately. It will watch the US Index and Stock Markets with liquidity back to the markets.
On the economic data today:
The economic agenda does not have any important Japanese data. From the US, there will be a release of the non-farm employment change from ADP, unemployment claims and the US crude inventories. The pair will closely watch for renewed international geopolitical fears, with the reemergence of the North Korean crises, along with anything related to Trump’s internal and external policies.