FUNDAMENTAL OVERVIEWUSD:The US dollar continues to be supported following the hawkish Fed dot plotlast week as the central bank’s tightening bias led to a hawkish repricing ininterest rate expectations. As a reminder, the Fed delivered a hawkish surprise by projecting a ratehike this year (the consensus was for no cuts or hikes). The market increasedrate hike bets with now 38 bps of tightening priced in by year-end. There's a 32%chance of a hike already in July and 68% probability of a move in September.The economic data and financial markets will now guide the Fed as Warshstated that “financial markets perform best when they react to incoming dataand are less efficient when they have to ask how the Federal Reserve will reactto the incoming data”. He added that “financial markets are the most importantsource of information to guide the central bank”.Trump also posted on Truth Social and, unlike his usual stance under FedChair Powell, did not object to the Fed’s decision. In fact, he said that “ratehikes could happen,” which sounds like a green light for Warsh and the Fed todo whatever they deem necessary.The signal is that the Fed is finally looking to deliver on its pricestability mandate and bring inflation back to the 2% target that it’s beenmissing since 2021. If the data says they need to hike, they will. Thisshould keep supporting the greenback until the next set of economic data.JPY:On the JPY side, we startedto see a few spikes recently as the USD/JPY pair reached the highest levelssince 2024. It looks more like profit-taking near cycle highs than outrightintervention given the size of the moves. As a reminder, the BoJhiked the policy rate to 1.00% as widely expected at the last meeting andannounced the pause to the bond tapering programme from next fiscal year. The forward guidanceremained the same with the BoJ looking to continue the normalisation process,raising the policy interest rate and adjust the degree of monetaryaccommodation “in response to developments in economic activity and prices aswell as financial conditions”. BoJ’s Uchida didn’t offeranything new in the press conference reiterating the central bank’s willingnessto raise rates further if economic conditions align. The divergence with theFed will continue to keep the USD/JPY pair skewed to the upside until the USdata starts to point in the other direction. USDJPY TECHNICALANALYSIS – DAILY TIMEFRAMEOn the daily chart, we cansee that USDJPY is trading near the 2024highs and it’s struggling to break through likely due to intervention fears. Abreak above the 161.95 level would take the pair to the highest level since1986. We can expect the sellers to continue to step in around these levels witha defined risk above the 162.00 handle to position for a drop into the 158.00support. The buyers, on the other hand, will look for a break to increase the bullishbets into new highs. USDJPY TECHNICALANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hour chart, we havea minor upward trendline and a support zone around the 160.50 level. This isgoing to be a key support now. If we get a pullback, we can expect the buyersto step in around the support with a defined risk below it to keep pushing intonew highs. The sellers, on the other hand, will look for a break lower to pilein for a drop back into the 158.00 handle next. USDJPY TECHNICALANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, there’snot much we can add here as from a risk management perspective, the buyers willhave a better risk to reward setup around the trendline. The sellers, on theother hand, will need the price to break below the support to open the door fornew lows. The red lines define the average daily range for today. UPCOMING CATALYSTSToday, we have the USFlash PMIs. On Thursday, we get the US Jobless Claims data and the US PCEreport. On Friday, we conclude the week with the Tokyo CPI and the finalUniversity of Michigan consumer sentiment survey. This article was written by Giuseppe Dellamotta at investinglive.com.