Modest US dollar rebound after the Fed
Selling the US dollar was the theme last week after the Fed disappointed the dollar bulls by failing to deliver any hawkish signals.
USD/JPY immediately dropped a cent to 112.80 and continued the decline the next day, touching a 15-month low of 110.67. It chopped in the 110.80 to 111.75 range on Friday but today pushed to 111.86.
The rally fizzled in quiet trading and the pair is back at 111.64.
Technicals
The climb today was halted at 111.86, which is the 38.2% retracement of the post-Fed decline. The 112.00 level is the major hurdle to overcome, it was the bounce high on Thursday.
The downside is the most-likely path for the pair, especially if stock markets begin to stumble. The S&P 500 is close to flat today after three days of gains.
A series of higher lows began on Thursday and a break below 111.50 or 111.25 would knock it out. That would be a fresh signal for shorts.
The danger is that the Bank of Japan intervenes. They denied any part in the snap higher Thursday but there were reports that they called around.