USD/JPY tumbles below 134.00 on Powell’s comments after Fed’s biggest hike since 1994
15.06.2022, 18:51

USD/JPY tumbles below 134.00 on Powell’s comments after Fed’s biggest hike since 1994

  • Federal Reserve raises key rate by 75 bps.
  • US dollar rises but then plummets at the beginning of Powell’s press conference. 

The USD/JPY dropped below 134.00 and hit a fresh daily low at 133.78 as Fed Chair Powell delivered initial remarks at the press conference following the FOMC meeting. The central bank raised the key interest rate by 75 basis points.

The dollar initially appreciated across the board but then reversed sharply, erasing gains in a few minutes. Stocks rebounded sharply and printed fresh highs while at the same time, US yields turned to the downside.

The Federal Reserve raised its target rate by 75 basis points, the biggest move since 1994. In the statement, the Fed mentioned that more interest rates are coming and warned there are increasing risks of a recession.

Chair Powell does not expect 75bp rake hikes to be common. The pace of rate hikes will depend on incoming data. He sees that inflation developments warranted a bigger hike at the June meeting. The dollar turned lower after his comments. The conference is taking place and remains a source of volatility.

Vulnerable while under 134.50

The USD/JPY four-hour chart is biased to the downside. A consolidation in USD/JPY below 133.50 would point to an extension of the correction, with the next support seen at 132.90. On the upside, immediate resistance is located at 134.40/50 and above at 135.00.

Technical levels

 

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