USD/JPY dropped following the Fed hiking by 25 bps

The USD/JPY pair holds to daily losses at the 140.40 area. The pair is precisely trading at 140.63, namely down by about -20% at the time of writing after Fed hiked rates by 25 bps as expected to 5.25% and left the door open for further hikes. Eyes on BoJ’s decision on Friday, expected to hold their dovish stance steady.

Following the Federal Reserve (Fed) decision, the USD DXY index continues to trade weak, near 101.19, and the USD/JPY stands with losses at 140.40.

Fed announced that it hiked rates by 25 basis points (bps) to 5.25%, as expected, its highest in 22 years. The statement noted that economic activity and the labour market remain robust and that inflation is elevated. In addition, the Federal Open Market Committee (FOMC) opened the door to further hikes as they will consider monetary policy lags and its implications on economic activity in the next decision.

Following the decision, the US Treasury yields traded mixed. The 2-year yield stands neutral at 4.89%, while the 5- and 10-year rates jumped to 4.16% and 3.90%, both slightly unchanged.