USD/JPY hardly moves as the Fed fail to inspire any volatility

• USD/JPY remains under 105.00 after the FOMC rate decision and announcements.
• The price yo-yo’d in a 20 pip range and it’s on to the press conference now.

Fundamental backdrop – nothing unexpected from the Fed

The US Federal Reserve seeks to achieve maximum employment, inflation at 2% over the long run and says economic path depends on the course of the coronavirus outbreak. This was already known before today’s meeting as Fed Chair Jerome Powell stated this at the Jackson Hole meeting. 

They went on to say “until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.”.

Lastly, the dot plot now suggests the Fed may not raise rates until 2023. This could be slightly longer than some analysts had been expected but it could be consistent with when the Fed sees employment levels recovering.

USD/JPY 1-hour chart

USD/JPY has barely moved after the FOMC rate decision and policy announcement. The price went to test the previous wave low but then popped back up almost instantly. If anything the pressure seems to be on the downside as the Fed announced they may wait further than some analysts had been expecting to raise rates. 

Both the indicators are still bearish as the MACD histogram is below zero and the Relative Strength Index is in an oversold position. Now we must keep an eye on these levels heading into the press conference as maybe something will be said there to inspire some volatility. 

Additional levels