USD/JPY under pressure amid risk-reversal

The USD/JPY pair dropped back into the red in the US afternoon, losing close to 100 pips from daily highs as the stock markets fell sharply on the FOMC minutes, weakening the risk appetite and allowing the safe-haven JPY to find demand. At the moment, the pair is down 0.07% at 110.67.

The Minutes from the March (14th &15th) Federal Reserve’s monetary policy meeting revealed that the officials are concerned about the uncertainty regarding the potential fiscal policy changes. Some of the committee members don't even expect to see any impact on the economy until next year. Another blow to the stocks came from the U.S. House of Representatives Speaker Paul Ryan who said that tax reform would take longer to accomplish than repealing and replacing Obamacare.

Furthermore, the sketchy tone of the minutes hurt the US Treasury bond yields, putting further pressure on the greenback. As of writing, the U.S.10-Year bond yield is down 0.47% at 2.34%.

• No light shed on the relationship between the Fed's balance sheet and the rate adjustment cycle - BBH

Technical outlook

To the upside, resistance levels for the pair could be found at 111.45 (daily high), 111.75 (20-DMA) and 112.20 (Mar. 31 high). On the downside, supports align at 110.10 (Mar. 27 low), 109.80 (Nov. 18 low) and 109 (psychological level).