The usd jpy fomc decision sent the pair lower after the Federal Reserve meeting, as the US dollar weakened broadly despite three votes for a rate hike.
The source said markets had expected Fed’s Logan and Fed’s Hammack to favor a hike. However, Fed’s Kashkari also dissented. It added that about a 30% chance of a rate increase had been priced in before the release. As a result, traders reset positions after the decision.
Fed Chair Warsh gave no signal on the next meeting, according to the source. Therefore, traders now look to the US CPI report due on August 12. The article said that data will likely shape whether the Fed raises rates in September.
USD JPY FOMC Decision Shifts Focus
On the Japan side, the source said the Bank of Japan is expected to keep rates unchanged tomorrow. However, it may lift growth forecasts and possibly its near-term inflation view. The report said traders will focus on forward guidance after a Bloomberg report last week.
That report said some BoJ officials saw the weaker yen as adding upside inflation risks. It also said they would be open to raising rates at a faster pace. Following that report, traders moved up rate hike bets. The source said markets now see a 70% chance of a move in October, compared with December before the report.
Key Levels and Data in View
The source said the yen jumped after that report but later gave back those gains. Meanwhile, it said Japanese officials might look at stealth intervention to slow the currency’s decline. Traders will also watch BoJ Governor Ueda’s press conference for any hint of faster tightening.
On the charts, the article said USD/JPY remains in consolidation near cycle highs. If the pair retests 162.85, buyers may step in with risk defined below that level. However, a break under 162.85 could open the way toward 160.50 support.
The source also pointed to the upward trendline on the 4-hour chart as support for the bullish structure. On the 1-hour chart, it said price action may stay rangebound. Later today, traders will watch the US PCE price index, advance second-quarter GDP and jobless claims. Tomorrow brings Tokyo CPI, the BoJ rate decision and the US second-quarter Employment Cost Index.
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Source: InvestingLive
