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USD/JPY Attempting a Bullish Reversal after the FOMC Statement

During the 6/14 session, the FOMC announced a rate hike of 25 basis points to the 1.00-1.25% range. It also brushed off Q1 weakness, and offered an optimistic outlook in terms of normalizing interest rates.

While the rate hike was highly expected, the forward guidance sounded more hawkish. According to FitchRating the Fed is "increasingly comfortable with its normalisation process and less data-dependent following recent inflation readings that have been slightly lower than consensus expectations (although they remain close to target). The interest rate hike showed the Fed was prepared to look through weak first quarter consumption and GDP and underlines Fed concerns about unemployment falling too far below its equilibrium rate."

The market agreed and bought the USD against most major currencies. The USD/JPY for example rebounded against a month-long decline.

USD/JPY 4h Chart

(click to enlarge)

Rebound vs. Bearish Trend:
- The USD/JPY slid from about 114.30 to 109. 
- The 4H chart shows the decline reversing after the FOMC released its latest monetary policy statement.
- As we get into the 6/15 US session, price is cracking a the falling trendline
- a break above 110.80 this week should open up a bullish reversal.
- The short-term target would be 112, with the 114.30 high from May in sight.
Bullish Outlook:
- Looking at the daily chart, we can see that 2017 has been a period of bearish correction, but the dominant trend seems to have turned bullish in Q4 of 2016.
- A bullish reversal stemming from hawkish FOMC expectations could bring USD/JPY back to its bullish trend. 
- Thus the 2016-2017 high around 118.65 is back in sight. 
- If price pulls back, a hold above 109.80-110 would offer more evidence for the bullish reversal scenario.

USD/JPY Daily Chart
(click to enlarge)

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