Japanese Yen falls after Fed holds rates, Warsh’s first dot plot signals caution

• USD/JPY trades near intervention levels after the Fed kept rates unchanged at 3.50%-3.75%.
• The Fed removed its reference to “additional rate adjustments,” reinforcing a more cautious and data-dependent policy stance.
• Fed projections show 2026 GDP growth revised down to 2.2% from 2.4%, while the dot plot signaled officials remain divided as inflation risks persist.

The USD/JPY pair rises near the 160.40 level after the Federal Reserve (Fed) left interest rates unchanged in the 3.50%-3.75% range, as widely expected, in Kevin Warsh’s first policy meeting as Fed Chair. The US Dollar (USD) surged against the Japanese Yen (JPY) following the Federal Open Market Committee (FOMC) announcement, after posting a daily low of 160.12.

The Fed removed its previous reference to “additional rate adjustments” from the statement, a change markets interpreted as a signal that policymakers are moving toward a more cautious, data-dependent stance.

Fed policymakers now see US Gross Domestic Product (GDP) growth at 2.2% in 2026, down from the 2.4% projected in March, while the longer-run growth estimate was left unchanged at 2%.

The dot plot also reinforced a cautious policy outlook. While markets had been looking for clearer signs of future rate cuts, the median projection continued to indicate that officials remain divided over the next steps, especially as inflation risks remain tied to recent Oil price volatility and geopolitical uncertainty.

Fed Chair Kevin Warsh said policymakers remain focused on inflation risks following the recent moves in energy prices linked to the US-Iran conflict. Although lower Oil prices could ease headline inflation, Warsh signaled that the Fed needs more confidence that price pressures are moving sustainably toward the 2% target.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 160.43, keeping a modest bullish bias as price holds above both the 20-period Simple Moving Average (SMA) at 160.27 and the 100-period SMA at 159.95. The cluster of nearby supports around 160.31 and 160.27 suggests underlying demand on shallow pullbacks, while the Relative Strength Index (RSI) near 56 hints at firm but not overstretched upside momentum.

On the topside, immediate resistance is seen at the recent horizontal cap near 160.48, and a clear break above this barrier would open the way for a continuation of the advance. On the downside, initial support is aligned at 160.31, followed by the prior horizontal floors at 160.15 and 160.12, with the 100-period SMA at 159.95 reinforcing the broader constructive setup as long as it holds.

(The technical analysis of this story was written with the help of an AI tool.)