• Dollar reaches five week high with Fed meeting market expectation.
• Powell’s comment after the monetary policy also favored the US dollar.
• Geopolitical tension and Rising cases of Omicron weighs on yen.

The dollar traded high and reached near a five-week high on Thursday after the Federal Reserve chair Jerome Powell flagged interest rate hikes amid inflation fears.

In the Policy meeting on Wednesday, the Fed indicated it is likely to raise U.S. interest rates in March, as per expectation, and he has also reaffirmed plans of ending its bond purchases that month before launching a significant reduction in its asset holdings.

He told reporters there was “quite a bit of room to raise interest rates without threatening the labour market.” He also warned that inflation remains above the Fed’s long-run goal and supply chain issues may be more persistent than previously thought.

On the other hand, Rising cases of Omicron in Japan weighs on the yen. “Japan’s daily count of new COVID-19 cases hit yet another record of over 70,000 on Wednesday as the more transmissible Omicron variant continues its rapid spread in Tokyo and elsewhere,” said Kyodo News.

Elsewhere, the geopolitical tension between Russia – Ukraine also underpins the bullish move of the quote – USD/JPY.

This week, US President Joe Biden said he would consider personal sanctions on Vladimir Putin if Russia invades Ukraine. He had warned there would be “enormous consequences” for the world if Russia made a move on the nation, which sits on its south-western border.

Russia has also accused the US and others of “escalating tensions” after it confirmed plans to fly 8,500 troops into Europe, and denies planning to enter Ukraine.

 USD/JPY 4 Hour Chart:

Support: 114.02 (S1), 113.44 (S2), 113.11 (S3).

Resistance: 114.94 (R1), 115.27 (R2), 115.86 (R3).

Fed by meeting the hawkish expectation of the market, helped the US dollar to trade high. We expect a bullish trend for USD/JPY.