A look at the weekly chart shows excellent support around the 101.50 area and this seems to be the line in the sand for buyers, while the bulls will want to see a break of the 102.50 area.
As long as the Fed’s economic projections hold up (and it’s worth remembering they rarely do) then we should see USD/JPY hold this support level. In fact I would go as far as saying the Fed meeting has provided USD bulls with a much needed shot of confidence on the likely path around the longer-term direction.
The key now for longer-term upside has to come from the BoJ. There are three main things that could be taken very positively by the market and subsequently cause the JPY to be sold off aggressively and the Nikkei to rally. The first will be an increase to its asset-purchase program, and I would hazard a guess this will come in June or July. There will also be a cut to corporate tax at some stage, while there has been talk that special economic zones could be targeted and we could see deregulation, which in turn could boost productivity.
All these factors suggest to me that USD/JPY could go higher through this year and while I was looking for a short-term move to the downside at the start of the week, in-line with the trend over the course of the year, I would not be surprised to see the pair close around the 108 to 110 region.