FED Chair Jerome Powell. Image source: Federalreserve, flickr.com
The U.S. dollar remained relatively unfazed by FED's hint at a rate hike in the near future in the first minutes following FOMC's January policy meeting. To learn more about the current state of the greenback, have a look at our last analysis of the EURUSD pair.
Jerome Powell and his colleagues from the FOMC largely delivered on the market's hawkish expectations, alluding to a very probable rate hike in the near future. The Committee also decided against lifting the Federal Funds Rate, which remains unchanged at 0.25 per cent.
USDJPY 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
Meanwhile, bullish momentum on the greenback keeps accumulating in the short term, as can be seen on the 4H chart above. The price action of the USDJPY recently broke out above the Pennant structure, implying the likely emergence of a new uptrend.
The price action is likely to continue consolidating in a tight range over the next several hours. The upper limit of the range, where selling pressure prevails, spans around the 38.2 per cent Fibonacci retracement level at 114.570. This key threshold is about to converge with the 100-day MA (in blue) and 200-day MA (in orange).
Meanwhile, the 23.6 per cent Fibonacci at 114.149 represents to lower limit of the range. The 300-day MA (in purple) and 50-day MA (in green) further bolster the existing buying pressure there.
An eventual breakout above the consolidation range is likely to be followed by a probable upswing towards the 61.8 per cent Fibonacci at 115.256.
Fed's New Take on Economic Recovery
Federal Open Market Committee statement: https://t.co/su4elPOWPU #FOMC
— Federal Reserve (@federalreserve) January 26, 2022
In the monetary policy statement, it was observed that:
"The path of the economy continues to depend on the course of the virus. Progress on vaccinations and an easing of supply constraints are expected to support continued gains in economic activity and employment as well as a reduction in inflation. Risks to the economic outlook remain, including from new variants of the virus. […] With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate. "
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