USD/JPY Downside Remains In Focus

Yen finished Wednesday's session up 0.81% against the USD, among the top performers within the G10. Post the Asia close USD/JPY got to 133.00, before edging back down, the pair then slumped from above 132.50 to 131.00 post the Fed. We sit slightly higher now, last around 131.40/45. Monday lows in the pair, near 130.50 remain intact. The focus remains on the downside though, with a move back above the 20-day EMA at 133.94 needed to reverse the bearish impulse.

• USD/JPY followed US yields lower as Fed Chair Powell raised rates by 25bps, but gave a cautious outlook, particularly around the banking sector and lending conditions.
• Yen rallied further as US equities slumped, led by the banking sector, as US Treasury Secretary Yellen stated the authorities weren't looking at blanket deposit insurance for the US banking system.
• This latter point aided yen cross performance against the likes of AUD and NZD, which pared gains as equity sentiment weakened. AUD/JPY got close to 87.60, against earlier highs near 89.00 (we currently sit at 87.80/90).
• The local data calendar has nationwide and Tokyo department store sales on tap, which is unlikely to move sentiment.