Dollar extends rally after hawkish Fed decisionYen stays weak despite intervention and hawkish BoJ rhetoricBoE remains on hold, is in no rush to hikeStocks rebound, futures slide, gold falls on Fed hike betsHawkish Fed Adds More Fuel to Dollar’s EnginesThe US dollar continued to gain against all the other major currencies on Thursday, still receiving fuel from Wednesday’s hawkish FOMC decision, where 9 members voted for at least one quarter-point rate hike by the end of the year, even though the new Fed Chair Kevin Warsh refrained from submitting rate projections to the new dot plot.What may have corroborated the notion that the Fed may need to start raising interest rates soon was a pullback in initial jobless claims for last week, adding to the notion that the labor market remains strong enough to allow for higher rates in the months to come.According to Fed funds futures, the probability of a 25bps hike in September has now increased to 92%, while another same-sized increase is nearly fully penciled in by March 2027.The greenback is extending its advance today and another reason for that may have been some concerns related to the US-Iran deal after US Vice President Vance suspended talks in Geneva, Switzerland, raising doubts as to whether this memorandum of understanding will eventually lead to a permanent truce. Oil prices are a little higher today, but not materially enough to suggest fears of re-escalation.To Intervene or Not to Intervene?The Japanese yen extended its slide against its US counterpart, with dollar/yen hitting resistance at 161.80 before pulling somewhat back today. It seems that the BoJ’s rate increase on Tuesday, yesterday’s intervention warnings and today’s hawkish remarks by BoJ Deputy Governor Himino, were not enough to stop the advance in this pair.That said, in other yen crosses, the yen has been outperforming other currencies for the last couple of days. It is just not as strong as the US dollar. Maybe that’s why Japanese authorities are delaying an actual intervention episode. Nonetheless, even if they decide to act any time soon, for dollar/yen to experience a sustained and long-lasting retreat, the BoJ may need to become even more hawkish.Deputy Governor Himino said that inflation could overshoot their objective and noted that there is a significant cost of being too late in raising interest rates, while the minutes from the April BoJ gathering revealed that some members wanted to accelerate the pace of rate hikes. That said, it seems that investors want more hawkishness to start massively buying the yen.BoE in No Rush to Hike Rates, Burnham Wins By-ElectionIn the UK, the BoE held interest rates unchanged via a 7-2 vote, with the two dissenters favoring a 25bps rate increase. However, in the statement accompanying the decision there was no evidence that policymakers are in a rush to raise interest rates. They acknowledged the decline in energy prices, although inflation risks remain. The market interpreted the overall message as neutral and continued expecting the Bank to remain on hold in July as well. They are fully penciling in a 25bps hike in November.Also, in the political scene, Andy Burnham won the by-election in Makerfield, getting one step closer to challenging Prime Minister Starmer for the leadership of the ruling Labor Party.Wall Street Rebounds, Gold Bears Eying $4,000On Wall Street, all three indices closed in positive territory yesterday, with the tech-heavy Nasdaq gaining nearly 2% and corroborating the view that the Fed-related slide was treated as a renewed buying opportunity. That said, the suspension of the talks in Geneva is likely one of the reasons why stock futures are in the red today.Gold is extending its decline for a third consecutive day, after it hit resistance near the 200-day exponential moving average (EMA). With the opportunity cost for holding the precious metal rising significantly after the Fed decision, the bears may be willing to challenge the round figure of $4,000 soon.