USD/JPY holds firm as US Dollar stays supported after Fed keeps rates unchanged

The Japanese Yen (JPY) remains under pressure against the US Dollar (USD) on Wednesday, with USD/JPY consolidating gains after the Federal Reserve’s (Fed) monetary policy announcement. At the time of writing, the pair is trading around 153.92, up nearly 1.0% on the day.

The Fed left its benchmark interest rate unchanged at the 3.50%-3.75% range, in line with market expectations. The decision was passed by a 10-2 vote, with Fed Governors Stephen I. Miran and Christopher J. Waller dissenting in favor of a 25-basis-point rate cut.

In its accompanying statement, the Fed said that economic activity has been expanding at a solid pace, while noting that job gains have remained low and the unemployment rate is showing signs of stabilization.

Policymakers acknowledged that inflation remains somewhat elevated and stressed that uncertainty around the economic outlook remains high, reiterating that the Committee is attentive to risks on both sides of its dual mandate.

The central bank reaffirmed that future policy decisions will remain data-dependent and repeated its commitment to supporting maximum employment and returning inflation to its 2% objective.

With the decision fully priced in, the immediate market reaction has been somewhat muted. The US Dollar remains supported, with the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trading around 96.70, rebounding after slipping to four-year lows.

Traders now look ahead to Fed Chair Jerome Powell’s post-meeting press conference for clues on the future path of monetary policy, particularly on the timing and pace of any potential rate cuts.