USD/JPY rises modestly to 106.50 as Fed raises rates as expected

• Federal Reserve hikes rates by 25bp as expected. 
• Yen drops as Wall Street hits fresh highs and yields move higher. 
• What’s next: Jerome Powell first post-meeting press conference.

The USD/JPY pair dropped to 106.00 around the moment of the release of the statement but quickly rebounded and climbed to 106.50, slightly below daily highs. The pair was holding above the level it had before the meeting, around 106.30/40, despite a retreat of the US dollar. 

The US central bank rose the Fed Fund rate to 1.5%-1.75% range as expected. The decision was unanimous. The FOMC staff upgraded the economic outlook. The “dot-plot” points to two more rate hikes during 2018. 

The yen was the most affected currency. It dropped across the board weakened by new highs in Wall Street and a modest move to the upside in US yields following the meeting. 

Levels to watch 

To the upside, resistance levels are seen at 106.60 (weekly high), 107.00 and 107.25/30 (last week high). On the flip side, support might lie at 106.05/10 (Mar 21 low), followed by 105.60 (last week low) and 105.40 (Mar 7 low).