Fed Chair Powell said yesterday that a slowdown in the pace of rate hikes "may come as soon as the December meeting", reinforcing market expectations for a downshift by the Fed. On the other hand, he stressed the need for more increases and higher terminal than previously thought, noting that bringing inflation down will require "holding policy at a restrictive level for some time". 
Markets focused on the tightening moderation, sending the USDOLLAR lower on Wednesday, while USD/JPY concluded its worst month since 1998, due to this prospect. Today it extends its losses to nearly four-month lows, with bears threatening the key DMA200 (at around 135.00). Daily closes below it would expose it to 130.38 but a breach may prove elusive in the near-term.
On the other hand, the RSI reaches oversold levels and as long as the DMA200 is defended, we can see a rebound towards 140.00. The upside however, continues to look unhospitable, as the broader 141.00-143.00 region contains multiple roadblocks.
Market participants may stay in the sidelines ahead of today's key US PCE Inflation, which can determine the pair's next move and Friday's Jobs Report. Any easing in inflation will likely cement a Fed slowdown, but higher figures could put a December downshift in doubt.
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
Retrieved 27 Jan 2023 https://www.federalreserve.gov/newsevents/speech/powell20221130a.htm