USD/JPY hits multi-day lows near 146.00 as FOMC hints at a slower pace of rate hikes

• Fed raises interest rates by 75 basis points for the fourth time in a row, as expected.
• FOMC signals it could slow down rate hikes soon.
• US Dollar tumbles across the board as US yields drop sharply.

The USD/JPY broke below 146.80 and tumbled to 146.03, hitting the lowest level since last Friday following Fed’s monetary policy decision. A decline in US yields and a weaker dollar are keeping the pair under pressure, near daily lows.

Fed moves as expected, analysts look at clues

The US central bank raises interest rates by 75 basis points on Wednesday, for the fourth time in a row. The vote was unanimous. The FOMC said it would take into account the cumulative effect of monetary tightening and the lag between the rate hikes and the effects on the economy, probably suggesting it would consider a slowdown as soon as the next meeting.

The considerations from the FOMC pushed the US Dollar to the downside and sent equity markets to the upside. Fed Chair Powel’s post-meeting press conference is underway.

USD/JPY weaker

The DXY turned negative and hit the lowest level in two days under 111.00. At the same time, the Dow Jones turned positive and it was up by 0.85%.

Treasuries rose following the FOMC statement. The US 10-year yield fell from 4.05% to as low as 3.97%, before bouncing back to 4.00%. The US 2-year yield fell from above 4.55% to 4.44%.

The decline in yields with the possibility of a slowdown in Fed rate hikes sent USD/JPY to the downside. The pair remains under pressure but volatility is set to remain elevated during Powell’s press conference.

Below 146.00, important support emerges at 145.50 and then attention would turn to 145.00. A consolidation below should increase the bearish pressure, suggesting more losses ahead. On the upside, now 146.90 is the immediate resistance area followed by 147.45. If USD/JPY rises above 148.00, a test of the weekly high at 148.85 seems likely.

Technical levels