The US dollar rose further in the market during Janet Yellen press conference. USD/JPY reached a fresh American session high at 109.71. Still, the pair remains in negate territory for the day. 

US bond yields moved off daily lows supporting the recovery of the USD/JPY. Currently, the pair is hovering around 109.50, 60 pips below yesterday’s closing price.

Treasury yield curve flattens further after the Fed rate decision

The Fed, as expected, rose rates as expected to the 1.00% - 1.25% range. The decision was not unanimous as Neel Kashkari, voted against. The surprise was that the central bank published a document that shows how it plans to unwind its balance sheet. 

Yellen said that the shrinking of the balance sheet is expected to begin this year. Also, she mentioned that additional gradual rate hikes are likely to be appropriate for the next few years. 

Overall, recent economic data, like today’s retail sales and CPI reports, did not change the plans, neither the timing, of the normalization process of FOMC. 

Fed raises rates by 25 bps; second hike of 2017

Fed's Yellen: Important not to overreact to a few inflation readings; data can be noisy

Technical levels 

To the upside, resistance levels are seen at 109.60 (Jun 12 low), 110.00 (psychological) 110.30/35 (daily high) and 110.45/50 (May 31 low). On the flip side, support could be located at 109.20, 108.80 (daily low) and 108.70 (Apr 13 low).