FUNDAMENTAL OVERVIEWUSD:The US dollar surged across the board on the more hawkish than expected dotplot (the consensus was looking for no cuts or hikes this year). The median dotshowed one rate hike this year and some of those hawkish members pencilled inmultiple hikes. By projecting a rate hike, the Fed effectively adopted atightening bias in the short-term.The market increased rate hike bets immediately with now 38 bps oftightening priced in by year-end. There's a 40% chance of a hike already inJuly and 72% 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.My expectation is that the negative supply shock caused by the US-Iran warturns into a positive demand shock now that the war ended and oil pricesdropped significantly. I think that's going to boost economic activity furtherand the markets are already positioning for that scenario.JPY:On the JPY side, the BoJhiked the policy rate to 1.00% as widely expected and announced the pause tothe 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 Japanese CPI data todaycame in line with expectations with all the inflation metrics below the 2%target. The divergence with the Fed will continue to keep the USD/JPY pairskewed to the upside. USDJPY TECHNICALANALYSIS – DAILY TIMEFRAMEOn the daily chart, we cansee that USDJPY broke out of the consolidationaround the 160.00 handle and surged towards the 162.00 handle following themore hawkish than expected Fed’s dot plot. We can expect the sellers to step inaround the 162.00 level with a defined risk above it to position for a correctionto the major upward trendline. The buyers, on the other hand, will want to seethe price breaking higher to increase the bullish bets 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 spot now. If we get a pullback, we can expect the buyers tostep 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, wehave yet another minor upward trendline defining the bullish momentum on thistimeframe. We can expect the buyers to lean on the trendline to keep pushing intonew highs, while the sellers will look for a break to extend the pullback intothe 160.50 support next. The red lines define the average daily range for today. This article was written by Giuseppe Dellamotta at investinglive.com.