The Federal Reserve has delivered its message, and markets are responding decisively. With policymakers reinforcing a “higher for longer” stance, global assets are undergoing a sharp repricing. The US Dollar has strengthened materially, while equities are adjusting to a more restrictive macro environment.

Focus now shifts to the Bank of Japan (BoJ), where policy direction carries heightened importance as USD/JPY approaches levels historically associated with intervention and the risk of sharp, multi-hundred-pip moves.

As expected, the Federal Reserve kept interest rates unchanged. The key signal came from the updated Summary of Economic Projections, which reinforced a more restrictive outlook for longer.

• The median projection now implies at most one rate cut in 2026
• Core PCE inflation forecast revised higher to 2.7% (from 2.4%)

Chairman Jerome Powell reiterated that further evidence of sustained disinflation is required before policy easing can be considered. This communication effectively validates the market’s recent repricing toward tighter financial conditions.

The US Dollar has responded positively to the Fed’s stance, supported by its yield advantage and renewed capital inflows.

The US Dollar Index (USDX) has reclaimed the 100.00 psychological level, though this zone continues to act as a key resistance barrier. A sustained move above this threshold would confirm a broader breakout, while failure to do so may lead to near-term consolidation.

For now, holding above the 99.35 support level keeps the Dollar’s structure constructive in the short term.

With the Fed decision behind it, market attention turns to the Bank of Japan. The policy divergence between the US and Japan has driven USD/JPY toward the 159.00 - 160.00 range, a zone closely associated with potential intervention risk.

The BoJ faces a critical decision point. A shift toward tighter policy could provide support to the Yen, while maintaining its current stance may increase pressure on the currency and elevate the likelihood of intervention from Japan’s Ministry of Finance.

USD/JPY is currently trading just below the 160.00 level. A move above this threshold could trigger heightened volatility, particularly if authorities step in to stabilise the currency. On the downside, a break below 159.00 may signal a near-term correction.

Global equities are recalibrating following the Fed’s updated outlook. The combination of elevated interest rates, rising energy costs, and slowing demand continues to weigh on valuations.

The S&P 500 has retreated from the 6700 resistance zone and is now approaching its 200-day moving average near 6620. This level represents a key technical support. A break below it could accelerate downside momentum, potentially exposing the index to a move toward 6500.

The broader environment reflects a balance between tighter financial conditions and persistent inflation pressures, keeping risk sentiment cautious.

Bank of Japan Rate Decision & Press Conference (Asian Session)

The primary catalyst for the session. Policy direction will shape Yen dynamics and determine whether intervention risks materialise.

US Initial Jobless Claims (8:30 AM ET)

Labour market data remains critical following the Fed’s stance. Any signs of weakness may intensify concerns around growth and inflation dynamics.

Post-Fed Market Positioning

Watch how markets absorb the Fed’s guidance. Sustained strength in the US Dollar above 100.00 would signal continued capital rotation into USD assets.

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