USD/JPY rises to 109.40, eyes break above post-Fed highs

• USD/JPY eyes break above post-Fed high of 109.45.
• 10-year US Treasury yield ticks higher.
• Asian desks responding to hawkish Fed?

USD/JPY found bids at 109.19 at Tokyo open and clocked a session high of 109.41. As of writing, it is trading a the 109.35 levels, while the 10-year yield is up 1.3 basis points (bps) at 2.733 percent.

The Fed kept rates unchanged as expected, but upgraded its language on inflation. Kathy Lien from BK Asset Management writes, "according to Janet Yellen's very last FOMC statement, the Committee now believes that inflation will move up this year and stabilize around 2% instead of remaining below 2% in the near term."

Lien adds, "as a result, they added the word "further" to the sentence that supports additional tightening - specifically, "The Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate." 

It appears as though the Asian desks are responding to the hawkish Fed statement released during the overnight trade. That said, the USD/JPY will likely see a convincing break above the post-Fed high of 109.45 only after the 10-year yield has moved above the previous day's high of 2.754 percent.

USD/JPY Technical Levels

FXStreet Chief Analyst Valeria Bednarik writes, " The longer-term perspective remains bearish for the pair despite this latest recovery, although in the short-term, the advance could extend, considering technical readings in the 4 hours chart, as indicators have extended their advances into positive territory, to reach fresh 3-week highs. Nevertheless, the pair continues developing well below bearish moving averages, with the 100 SMA now around 110.30 in the mentioned chart, still moving much faster than the 200 SMA, a clear sign of bears'  domination."

Support levels: 108.60 108.25 107.90

Resistance levels: 109.25 109.70 110.10