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  • Yen tumbles versus the dollar but gains ground against other G10 currencies.
  • DXY jumps to highest in two months above 91.00.

Federal Reserve keeps rates unchanged, brings forward expectations of the first rate hike.

The USD/JPY gained more than sixty pips since the FOMC statement was released. Recently it reached at 110.49, the highest level since early April. A stronger US dollar across the board and higher US yields boosted the pair.

The Federal Reserve kept monetary policy unchanged. However, in the projections of the FOMC staff, now the first rate hike is seen in 2023, earlier than the previous forecast. Also, the members revised inflation expectations to the upside. Those changes boosted US yields and the greenback across the board.

In Wall Street, the Dow Jones is falling by more than 1%. The deterioration in risk sentiment limited the rally of USD/JPY and boosted the yen versus other G10 currencies.

As of writing, USD/JPY is testing the 110.50 area as Fed’s Chair Powell speaks with journalists. He mentioned that it “is clear we are on a path to a very strong labor market” but warned that the standard of “substantial further progress” (needed to tighten monetary policy) is “still a way off.”

The USD/JPY is about to post the third-highest daily close since March 2020. On the upside, the next resistance may be seen at 110.75, and then comes the 2021 peak slightly below 111.00.

Technical levels