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  • USD/JPY is trading at 109.17, the highest level since May 31.
  • Dollar’s rise is accompanied by an uptick in the US treasury yields.
  • US Federal Reserve cut rates by 25 basis points as expected.
  • Fed’s Powell dented expectations of aggressive easing by calling the rate cut as mid-cycle adjustment.

The American Dollar is gaining ground in Asia as the US Federal Reserve (Fed) cut interest rates by 25 basis points as expected in the overnight trade but dented expectations of further easing.

As of writing, the USD/JPY pair is trading at 109.17, the highest level since May 31, having bounced up from the 5-day moving average of 108.70 earlier today.

The US treasury yields are also reporting gains with the 10-year yield currently trading at 2.035% – up three basis points on the day.  

Not-so-dovish Fed

Federal Reserve Chairman Jerome Powell referred to central bank’s rate cut approved Wednesday as a mid-cycle adjustment to policy and cautioned markets against assuming that this week’s cut is the beginning of a new easing cycle.

Many, including the likes of ANZ, were expecting the Fed to retain the easing bias. The central bank, however, adopted a neutral stance prompting a sell-off on Wall Street and a broad-based USD rally.

Looking forward, the USD/JPY pair looks set to challenge resistance at 109.93 (May 30 high). The ascent, however, could be slowed down by losses in the equities. At press time, the futures on the S&P 500 are reporting a 0.30% drop.

Pivot levels