USD/JPY retreats from 2-month highs after FOMC minutes

The US dollar moved modestly to the downside after the Federal Reserve released the minutes of the latest meeting. USD/JPY pulled back but still remained higher for the day. It was trading at 104.25, up 0.73% for the day. 

The pair earlier reached 104.47, hitting the highest level since July 29. It was unable to break above the 104.50 zone and started to decline. After the FOMC minutes, it dropped to 104.07 and rebounded. 

Limited impact from the minutes

The minutes from the latest meeting of the Fed showed that the decision to keep rates unchanged was a close call. According to the document, it was noted that a reasonable argument could be made either for an increase in interest rates at the meeting or for waiting for some additional information on the labor market and inflation. Among the members that supported awaiting further evidence, “several stated that the decision at this meeting was a close call.”

So far the market impact from the minutes had been limited. The US dollar moved modestly to the downside, stocks rose marginally and gold prices remained near the $1250 area. 

Levels to watch 

The retreat of the USD/JPY pair so far has been limited, so the immediate key resistance area continues to be 104.50, followed by 105.00 (psychological level) and 105.56 (Jul 29 high). On the opposite direction, support could be seen at 104.05 (Oct 11 high) and 103.65 (Asian session high).