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USD/JPY Pulls Back From a 3-Week High on Dovish Yellen Remarks

By Baruch Spier
31 March 2014 14:48 GMT

Talking Points:

  • Yellen says economy will need extraordinary support for some time
  • Yellen previously signaled a possible rate hike in early 2015
  • USD/JPY drops 15 pips on dovish remarks

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Fed Chair Yellen released comments that were slightly more dovish than her remarks after the last FOMC meeting, sending the US Dollar lower in Forex markets.

Yellen said the economy will need extraordinary support for some time and the taper of quantitative easing doesn’t mean a reduced commitment to stimulus. Yellen warned that there is still considerable slack in the economy and labor market and the Fed is still short of reaching its employment and inflation goals.

The newest Yellen comments sounded more dovish than her remarks from earlier this month that signaled a possible rate hike by early 2015. Yellen had said then that the current quantitative easing program may end by this fall, and when prodded by reporters for timing of a possible rate hike, she said six months after that. Therefore, today’s comments indicate that Yellen still supports accommodative policy despite her March comments, which caused the dollar to decline on the prospect of a longer wait for a rate hike.

USD/JPY 1-Minute: March 31, 2014

USDJPY-Pulls-Back-From-3-Week-High-on-Dovish-Yellen-Remarks_body_Picture_1.png, USD/JPY Pulls Back From a 3-Week High on Dovish Yellen Remarks

The US Dollar dropped about 15 pips against the Japanese Yen on the release of the text from her speech, falling back from a 3-week high set earlier today at 103.44. Currency Strategist Ilya Spivak said that USD/JPY has completed a bullish triangle formation, and he has entered long initially targeting the March 7 high at 103.75.

Chart created by Baruch Spier using Marketscope 2.0. Add DailyFX Support/Resistance to your charts at FXCM Apps.

-- Written by Baruch Spier, DailyFX Research. Feedback can be sent to bbspier@fxcm.com .

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31 March 2014 14:48 GMT