USD/JPY Upbeat after Hawkish Fed Rhetoric
USD/JPY Analysis
Inflationary pressures continued to abate as Tuesday's US CPI report showed, with the headline figure decelerating to 7.1% y/y and the lowest level of the year. This allowed the Fed to proceed with its well-telegraphed moderation in the pace of tightening, delivering yesterday a 50 basis points rate hike. [1]
This was a significant downshift from series of outsizes 0.75% increases, but the bank pointed to more tightening ahead and Chair Powell delivered a hawkish message. Furthermore, officials now expect the benchmark rate to peak to a median of 5.1%, from 4.6% previously. This sizeable bump in the projected terminal rate suggests 75 basis points of rate increases.
USD/JPY finds support today as markets assess the Fed's update, which keeps the critical 137.70-138.00 region in its eyesight. A break above this level could spark a further recovery towards 140.61, although the upside contains many roadblocks.
Despite today's upbeat mood, the pair still runs a negative week and the reaction to the Fed's hawkish signals seems rather underwhelming for now. Furthermore, USD/JPY had rejected the aforementioned critical resistance on Tuesday, due to CPI-fueled slump.
As such, the greenback remains in a perilous state and there is still scope for lower lows (133.62), but sustained weakness and larger decline towards 130.38, has a high degree of difficulty at this stage.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
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| Retrieved 18 Apr 2026 https://www.federalreserve.gov/monetarypolicy/fomcpresconf20221214.htm |
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