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USD/JPY Pulling Back Sharply after FOMC Signaled Pausing its Gradual Rate Hike Campaign

Today, the FOMC decided to maintain the fed fund rate at 2.50% and pause its rate hike campaign. This was a more dovish tone than its previous stance, which was to gradually increase interest rates.

Fed sees no rate hikes in 2019, sets end to asset runoff

WASHINGTON (Reuters) - The U.S. Federal Reserve on Wednesday brought its three-year drive to tighten monetary policy to an abrupt end, abandoning projections for any interest rate hikes this year amid signs of an economic slowdown, and saying it would halt the steady decline of its balance sheet in September.

...

From Reuters

As expected with a surprisingly dovish tone, the USD fell across the board against the majors. Let's take a look at the $USDJPY

USD/JPY Daily Chart

(click to enlarge)

Threatening Support:
- As we can see on the daily chart, USD/JPY has been rallying since the start of the year. 
- From a low under 108, it has come up to tag 112 in early March. 
- The pair was already consolidating ahead of the FOMC decision, and fell after it. 
- Now, with price right around 110.60, USD/JPY is testing a rising trendline support.
- I think a close below 106.50 this week would could signal a turning point for USD/JPY in the short to medium-term.
- I think if price can then hold under 111 on a subsequent pullback, the downside would be more clear back towards the 108 area, which was a key support/resistance pivot. 

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