USD/JPY seesaws around 135.30 on Fed’s hike as it opens the door for a pause

USD/JPY fell to a new daily low of 134.83 after the Fed’s dovish hike.
Federal Reserve officials voted unanimously for a 25 bps rate hike.
Policymakers dropped some hawkish language, perceived as a signal that the Fed could pause.

Christian Borjon Valencia FXStreet

The USD/JPY extended its losses past the prior’s day low of 135.07, collapsing down the 135 figure, as the US Federal Reserve (Fed) decided to raise rates by 25 bps, though it signaled that it would pause its cycle. At the time of writing, the USD/JPY is trading volatile at around the 134.80-135.40 area.

Summary of the Fed’s monetary policy statement

Federal Reserve officials voted unanimously to raise rates by 25 bps, as shown by its monetary policy statement. Policymakers dropped the “some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time” language and instead mentioned that “in determining the extent to which additional policy firming may be appropriate,” policymakers would study incoming data.

Fed officials said that tightened credit conditions would likely weigh on the economy and reiterate the soundness of the banking system. Furthermore, policymakers emphasized that the labor market remains robust, and inflation is elevated. Regarding the balance sheet reduction, it will continue as planned since May 2022.

After the Federal Reserve’s decision, US rate futures show traders are pricing in rate cuts in September, according to Reuters.

USD/JPY Market’s Reaction

The USD/JPY 1-hour chart portrays that the pair fell below its prior low of 135.07 and printed a new one at 134.83. From there, the USD/JPY pair bounced off, with USD/JPY buyers eyeing a test of the 20-hour SMA at 135.72. But firstly, the buyers must conquer 135.50.

USD/JPY Technical Levels

USD/JPY

Overview
Today last price	135.33
Today Daily Change	-1.22
Today Daily Change %	-0.89
Today daily open	136.55

Trends
Daily SMA20	133.99
Daily SMA50	133.93
Daily SMA100	132.89
Daily SMA200	136.99

Levels
Previous Daily High	137.78
Previous Daily Low	136.31
Previous Weekly High	136.56
Previous Weekly Low	133.01
Previous Monthly High	136.56
Previous Monthly Low	130.63
Daily Fibonacci 38.2%	136.87
Daily Fibonacci 61.8%	137.22
Daily Pivot Point S1	135.99
Daily Pivot Point S2	135.42
Daily Pivot Point S3	134.52
Daily Pivot Point R1	137.45
Daily Pivot Point R2	138.34
Daily Pivot Point R3	138.91

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

AUD/USD hangs close to monthly lows, still defends 0.7100 ahead of Fed decision

AUD/USD retains its negative bias for the third straight day, defending 0.7100 while trading close to a monthly low in Wednesday's Asian session on Wednesday. The US Dollar stands firm near a two-week high as the anticipated Fed rate hike and oil-driven inflation fears continue to push US bond yields to a multi-year high. Furthermore, escalating Middle East tensions benefit the safe-haven buck and weigh on the risk-sensitive Aussie.

USD/JPY holds firm above 155.00, awaits Fed policy announcements

USD/JPY climbs to a fresh one-week high above 155.00 in the Asian session on Wednesday amid a bullish US Dollar. Oil-driven inflation fears, along with the anticipated Fed rate hike, continue to support surging US bond yields. Moreover, rising US-Iran tensions underpin the USD's reserve currency status. The pair, however, remains below the mid-155.00s as bulls seem hesitant ahead of the Fed decision later today and the BoJ meeting, starting on Thursday.

Gold traders seem noncommittal below $4,350; eyes Fed rate decision

Gold clings to modest intraday gains through the first half of the European session, albeit it lacks follow-through buying and remains below $4,350. The US Dollar eases from a two-week high amid some profit-taking, offering support to the commodity. Traders, however, seem hesitant to place aggressive directional bets and opt to wait on the sidelines heading into the key central bank event risk.

Cardano's bearish breakout warns of a 15% downside risk

Cardano (ADA) hovers around $0.1900 at press time on Wednesday after a 6% decline the previous day, breaking below a crucial support level. Declining on-chain activity across the Cardano ecosystem, with reduced transaction count and Real Economic Value (REV), suggests waning user demand.

Fed decision in focus

Starting with the most important, the Fed decision. Heading into the event, data showed a rather punchy US August jobs report, which, you will likely recall, triggered a hawkish Fed rate repricing in rates markets. However, the recent US August CPI print mattered more.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.