USD/JPY closes above 148.00 amid Fed’s hawkish stance

USD/JPY closed Wednesday at 148.34, up by 0.33%.
The Fed kept rates steady but signalled high rates will be kept for longer.
Monetary policy divergences could weaken the JPY still.

Patricio Martín FXStreet

On Wednesday, the USD/JPY closed with gains above 148.00 as the USD got a boost amid the hawkish Federal Reserve (Fed) stance, which fueled US yields to multi-year highs.

As expected, the US Federal Reserve kept interest rates unchanged at 5.25%-5.50%. Still, it surprised the market with its projections to keep rates at 5.1% for 2024 (revised from 4.6%) and virtually sent a message that it will keep rates at restrictive levels for a longer time. In addition, the projections for rates in 2023, via the so-called dot plots, were held at 5.6% and signalled one last hike in the remainder of the year, and markets are placing bets for it to be in December.

As a reaction, the short-term US yields rose to multi-year highs, with the 2,5 and 10-year rates advancing to 5.17%, 4.57% and 4.40%, respectively, making the US Dollar gain interest.

On the JPY’s side, eyes are on Friday's Bank of Japan (BoJ) meeting decision. The bank has already stated that changes to monetary policy won't be considered until local wage and inflation indicators match their projections. However, markets will look for any clues to start discounting a potential lift-off in the near term. In the meantime, as the Fed’s tightening cycle isn’t over, divergences between the two banks will continue weakening the Yen unless the BoJ leaves its ultra-dovish stance.

USD/JPY Levels to watch

Based on the daily chart analysis, a bullish outlook is noted for USD/JPY in the near term. The Relative Strength Index (RSI) stands above its midline in positive territory, further validated by the decreasing red bars on the Moving Average Convergence Divergence (MACD). In addition, the pair is above the 20,100,200-day Simple Moving Average (SMA), indicating that the bulls are in command of the broader picture.

Support levels: 147.80, 147.10 (20-day SMA), 146.00.

Resistance levels: 148.50, 149.00, 150.00.

USD/JPY Daily Chart

USD/JPY

Overview
Today last price	148.21
Today Daily Change	0.35
Today Daily Change %	0.24
Today daily open	147.86

Trends
Daily SMA20	146.82
Daily SMA50	144.15
Daily SMA100	142.03
Daily SMA200	137.46

Levels
Previous Daily High	147.92
Previous Daily Low	147.51
Previous Weekly High	147.95
Previous Weekly Low	145.9
Previous Monthly High	147.38
Previous Monthly Low	141.51
Daily Fibonacci 38.2%	147.76
Daily Fibonacci 61.8%	147.67
Daily Pivot Point S1	147.61
Daily Pivot Point S2	147.35
Daily Pivot Point S3	147.19
Daily Pivot Point R1	148.02
Daily Pivot Point R2	148.18
Daily Pivot Point R3	148.43

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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