• FOMC Chairman Powell says policy rate is just below estimates of neutral.
• US Dollar Index drops to 97 on Powell remarks. 
• Wall Street extends rally.

The USD/JPY pair came under a heavy selling pressure in the last hour as the FOMC Chairman Jerome Powell's comments on the policy outlook weighed on the greenback. After slumping to a fresh daily low of 113.48 with the initial market reaction, the pair recovered a small portion of its losses and was last seen down 0.05% on the day at 113.73.

In his prepared remarks at the Economic Club of New York luncheon on Wednesday, Powell said that the policy rate was 'just below' their estimates of neutral and added that they were not on a pre-set policy rate path and they were paying very close attention to the data. "The Fed balancing risks of shortening expansion, on one hand, higher inflation and instability on the other," Powell stated.

• Fed's Powell: No pre-set policy path; paying 'very close attention' to data.

The US Dollar Index, which rose to a two-week high above 97.50 earlier in the session, fell sharply and tested the 97 handle. At the moment, the index is down 0.33% on the day at 97.05.

However, stocks markets reacted positively to these comments with the Dow Jones Industrial Average and the Nasdaq Composite both gaining around 2% and helped the pair limit its losses by making it difficult for the safe-haven JPY to find demand.

Technical levels to consider

The pair could encounter the first resistance at 114.20 (Nov. 12 high) ahead of 114.55 (Oct. 3 high) and 115 (psychological level). On the downside, supports align at 113.35 (20-DMA), 112.95 (50-DMA) and 112.25 (100-DMA).