• The Federal Reserve raised rates by 25 basis points and hints at six more hikes.
• Bank of Japan Governor Haruhiko Kuroda sees inflation remaining short of 2% target.
• Ukrainian President Volodymyr Zelenskyy invoked 9/11 during an urgent appeal to the US Congress.

The US dollar trades high against its yen counterpart and reached a six year high at 119.10 on Thursday trading session after the Federal Reserve pushed their interest rates higher by 25 basis points (bps).

The Fed has increased fund rate by 25 basis points to 0.50% for the first time since 2018 and meet the market expectation which helped the USD rally. Moreover the bank has hinted at seven rate hikes in 2022, that is, one at each remaining monetary policy meeting, and affirmed the commitment to start reducing its $9 Trillion balance sheet after their next meeting. 

8 members approved the rate hike and 1 with the dissenting voice of the St. Louis Fed President James Bullard, who wanted a 50-basis-point hike.

The Monetary Policy Committee noted that the stagnation caused consequences of the COVID-19 pandemic have pushed inflation to its highest levels in the last four decades and warns that Ukraine’s invasion is highly likely to increase inflationary pressures and weigh on economic activity.

On the other hand, Japan’s Haruhiko Kuroda remark highlights the widening divergence between the BOJ’s dovish stance and the U.S. Federal Reserve, which raised interest rates. Japan is unlikely to see inflation hitting a central bank target of 2%, even accounting for rising energy cost.

Kuroda told parliament that “It will take more time to achieve our 2% inflation target in a stable manner, so it’s too early to debate specifics on how to exit from easy policy.”

Talking about the Ukraine crisis, As per a recent news, Russian forces destroyed a theater in Mariupol where hundreds of people were sheltering Wednesday and rained fire on other cities, Ukrainian authorities said, even as the two sides projected optimism over efforts to negotiate an end to the fighting.

On Wednesday, Ukrainian President Volodymyr Zelenskyy invoked 9/11 during an urgent appeal to the US Congress for more weapons to stem the Russian assault. US President Joe Biden announced an additional $800 million for Ukraine’s military and said Russian President Vladimir Putin is a “war criminal.”

USD/JPY 4 Hour Chart:

Support: 118.25 (S1), 117.74 (S2), 117.30 (S3).

Resistance: 119.20 (R1), 119.63 (R2), 120.14 (R3).

The Fed’s rate hike underpins the US dollar bulls, Traders will pay attention to Uraine crisis update, In the meantime, we expect a bullish trend for USD/JPY.