Japanese Yen falls as US Federal Reserve delivers

The USD/JPY currency pair reached fresh weekly highs in the 155.50 range after the US Federal Reserve announced a 25 basis point interest rate hike. The US Dollar resumed its weekly advance, following a brief pause before the announcement from the Federal Open Market Committee. The Federal Open Market Committee's Summary of Economic Projections indicated that at least one more rate hike would occur before the year's end, with 12 out of 18 officials predicting one more 25 bps hike and 4 officials anticipating two hikes.

Only 2 members believed no further rate increases would be made this year. Inflation concerns persisted, with policymakers projecting end-2026 PCE inflation at 3.7% compared to 3.6% in June, and core inflation at 3.4% versus 3.3%. Employment expectations showed an anticipated 4.1% unemployment rate at year-end, up from 4.3% in June, while GDP growth was forecasted at 2.3% for 2026, up from 2.2% in June.

The USD/JPY pair traded at 155.55, establishing fresh weekly highs, although it remained bearish as it held below key moving averages, such as the 20-day, 200-day, and 100-day SMAs. Traders noted that the layered overhead supply from these averages suggested rallies were likely to be met with selling pressure. On the upside, initial resistance was identified 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, with a sustained break needed to alleviate the current bearish pressure. On the downside, the 155.00 level served as immediate support ahead of the 154.50 zone.