FxWirePro: USD/JPY inches closer to 107 handle, Powell’s speech boosts market’s risk appetite

USD/JPY chart - Trading View 

USD/JPY was trading 0.19% higher on the day, after closing 0.55% higher in the previous session.

Fed Chair Powell’s speech boosts the market’s risk appetite, supporting the major higher.

As was expected, Fed Chair Jerome Powell confirmed policy makers would seek to achieve an average inflation target of 2%, allowing periods of higher inflation to be offset by periods of low inflation. 

The decision indicates that the Fed is likely to keep interest rates near zero for longer. The move targets to drive activity and underpin employment.

When the central bank aims to leave rates on hold for longer, it opens the door to further deterioration in yield disparity as other central banks begin to show signs of tightening policy.

For now markets are cheering the positive and proactive policy setting. However, the dollar will eventually come under pressure.  

Price action is holding above 55-EMA and is set to test next major resistance at 107 (nearly converged 38.2% Fib and cloud base).

Major trend is bearish and will remain bearish as long as the pair holds below 200-DMA.