The USDJPY pair was trading flat during the US session, last seen slightly above the 110 level, which is an important psychological level.

On Wednesday, the Fed kept benchmark rates and the pace of bond-buying (QE) unchanged, but the biggest shift was a hawkish tilt to its rate forecasts as Fed median projections showed 2 rate hikes by the end-2023, and 7 FOMC members saw a hike in 2022.

The 10-year yield rose sharply after the FOMC decision, from 1.5% to 1.6%, only to drop back below 1.5% on Thursday. It looks like traders are reassuring themselves that inflation is indeed transitory and the Fed has it under control. 

On Friday, the yield failed to get back above the 1.5% and was down notably, meaning investors were buying bonds

Despite the falling yields, the dollar index was up sharply, booking one of its best weeks in months. 

The USDJPY pair has defended the 110 support for now, and it might be poised for another rally higher. The resistance is now at this week's highs of 110.70, with the key level to watch at 111, where the current cycle tops are seen.

Alternatively, should the greenback decline below 110, we might see a leg lower toward 109.70, where the 21-day EMA stands.

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