Japanese Yen falls as US Federal Reserve delivers

• The US Federal Reserve hiked the Funds Target Range to 3.75%–4.00%.
• Officials remain concerned about inflation, but are confident about economic growth.
• USD/JPY trades at fresh weekly highs and maintains a positive bias.

The USD/JPY pair trades at fresh weekly highs in the 155.50 price zone after the United States (US) Federal Reserve (Fed) delivered the expected 25 basis point (bps) interest rate hike. The US Dollar (USD) resumed its weekly advance with the headlines, following a pause ahead of the announcement.

The Federal Open Market Committee (FOMC) released the Summary of Economic Projections, which showed that officials anticipate at least one more rate hike before the year-end, as 12 out of 18 officials expect one more 25 bps hike, while 4 officials expect two hikes. Only 2 members anticipate no more moves this year.

Concerns continue to revolve around inflation as policymakers see end-2026 PCE inflation at 3.7% versus 3.6% in June, and core inflation is seen at 3.4% versus 3.3%. Regarding employment, officials anticipate a 4.1% unemployment rate at end-2026 versus 4.3% in the June projections. Finally, policymakers see 2.3% GDP growth in 2026 versus 2.2% in June, and longer-run growth at 2.0% versus 2.0% in June.

 USD/JPY Technical Outlook:

USD/JPY trades at 155.55, establishing fresh weekly highs, yet still looking bearish as, in the daily chart, spot holds below the 20-day Simple Moving Average (SMA) at 157.03, the 200-day SMA at 158.41, and the 100-day SMA at 159.53. The layered overhead supply from these averages suggests rallies are likely to be sold, while the Relative Strength Index (RSI) and the Momentum indicator both advance, yet remain within negative levels, limiting the bullish potential of the pair.

On the topside, initial resistance emerges at the 20-day SMA near 157.03, followed by the 200-day SMA at 158.41 and then the 100-day SMA at 159.53, where a sustained break would be needed to ease the current bearish pressure. On the downside, the 155.00 figure comes as immediate support ahead of the 154.50 price zone.

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