Drops below 114.00 as market sentiment worsens and US yields slide

• USD / JPY pulls back below the 114.00 level, down around 0.35% on the day.
• The 10-year US Treasury yield falls three basis points, standing at 1,429%.
• USD / JPY Technical Outlook: Has an upside bias as long as it remains above 112.53.

After climbing above the 114.00 level on Wednesday, USD / JPY slides and falls towards 113.65 during the American session on Thursday. As the US session progresses, market sentiment is mixed as US stock indices fluctuate between gains and losses after the last monetary policy meeting of the Federal Reserve.

On Wednesday, the US central bank revealed that it would increase the speed of the decline in bond purchases, as of mid-January 2022. Additionally, the dot chart, which projects Fed funds rate expectations among Fed policy makers, shows that the rate is expected to be 0.90% by the end of 2022, which means the Fed would rise at least three times in 2022.

USD / JPY reacted higher after the monetary policy statement. But nevertheless, the upward movement faded, since this decision was already fully valued in the price of the pair.

Meanwhile, short-term US Treasury yields are falling, with the 10-year yield at 1,429%, a headwind for the USD.

USD/JPY Technical Perspective

USD / JPY is trading below the 50-day moving average at 113.80. Also, as long as the price is above the 100 and 200 day SMAs, along with the Nov 13 low at 112.53, the bias is to the upside, so any pullback towards the aforementioned support level should be seen as opportunities for the USD / JPY bulls.

The pime support was the low of December 10 at 113.22, followed by the round level at 113.00. The break of this last level would expose the low of November 13 in 112.53.