• The US central bank kept rates unchanged and signaled it would hike rates “soon.”
  • The USD/JPY spiked to 114.48 then retreated to pre-Fed levels on a “buy the rumor, sell the fact” event.
  • US 10-year T-bond yield shoot through 1.80%, sits comfortably around that level, post-Fed.

On Wednesday, in the Fed’s first monetary policy meeting, the US central bank maintained rates unchanged at 0 to 0.25%, while on its forward guidance, signaled that it will start hiking rates “soon,” which spurred a spike on the USD/JPY towards 114.48. At press time, the USD/JPY is trading at 114.27 at 19:22 GMT.

USD/JPY Market Reaction

The USD/JPY spiked towards 114.48; meanwhile, the US 10-year Treasury yield shoots through 1.8029%.

Summary of the Federal Reserve monetary policy statement

In an overview of the monetary policy statement, Fed policymakers expressed that raising the Federal Funds Rate would be appropriate. As mentioned the last year, the Fed increased the pace of the bond taper and would end the Quantitative Easing (QE) by early March. 

Despite tightening conditions, the US central bank expressed that it will continue to monitor information for the economic outlook. The Fed said that “supply and demand imbalances related to the pandemic and its reopening” contributed to elevated inflation levels.

The US central bank commented that it “expects that reducing the balance sheet size will commence after the process of increasing the target range for the Federal Funds Rates has begun.”

Regarding the job market, they noted that “job gains have been solid in recent months, and the unemployment rate has declined substantially.”

Putting this aside, the USD/JPY trader’s focus turns to the Fed’s Chairman Jerome Powell, who will be speaking at 19:30 GMT. 
Follow the coverage here: Fed Press Conference: Chairman Jerome Powell speech live stream – January 26

USD/JPY

Overview
Today last price 114.27
Today Daily Change 0.37
Today Daily Change % 0.32
Today daily open 113.9
 
Trends
Daily SMA20 114.84
Daily SMA50 114.3
Daily SMA100 113.31
Daily SMA200 111.53
 
Levels
Previous Daily High 114.16
Previous Daily Low 113.67
Previous Weekly High 115.06
Previous Weekly Low 113.6
Previous Monthly High 115.21
Previous Monthly Low 112.56
Daily Fibonacci 38.2% 113.86
Daily Fibonacci 61.8% 113.97
Daily Pivot Point S1 113.66
Daily Pivot Point S2 113.42
Daily Pivot Point S3 113.17
Daily Pivot Point R1 114.15
Daily Pivot Point R2 114.4
Daily Pivot Point R3 114.64

 

 

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