FxWirePro: USD/JPY erases early losses, greenback strengthens despite Fed’s rejection of tapering

USD/JPY chart - Trading View 

USD/JPY erases early losses and was trading 0.05% higher on the day at 108.63 at around 04:30 GMT.

Greenback found some bids after Biden's tough stance on China and Russia during his first address to the US policymakers’ lot.

US Federal Reserve chair Jerome Powell pushed back tapering expectations while defending easy money policy.

US President Biden urged Congress to back his $4.0 trillion spending and to pass the stimulus package.

Hopes of extended monetary easing and Biden’s mammoth fiscal stimulus are likely to propel the inflation further towards the north.

US inflation expectations jump to multi-year high. Reflation fears could derail the US dollar’s much-awaited recovery. 

As per the latest data from St. Louis Federal Reserve, the US inflation expectations jumped to 2.41% on Wednesday to hit the highest level since April 2013.

Technical bias is neutral. Indicators do not provide a conclusive direction. Focus on US Q1 GDP data for impetus.

First forecasts for the US Q1 GDP will be the key as the headline growth figure is expected to jump from 4.3% to 6.5% YoY.

Inverted hammer on Wednesday's candle dents upside. Daily cloud offers strong support. Major weakness likely on break below.