USDJPY TECHS: Bull Cycle Remains In Play

There were only limited changes to June's FOMC statement versus May's (PDF link). 

• The characterization of the unemployment rate is basically the same, now simply "remains low" instead of "has stabilized at a low levels in recent months". Also as expected, the Committee notes now that uncertainty about the economic outlook has "diminished but remains elevated", versus "increased further", suggesting reduced uncertainty vs the May meeting.
• The Statement also keeps "The Committee is attentive to the risks to both sides of its dual mandate" but removes the following "and judges that the risks of higher unemployment and higher inflation have risen."
• It's quite likely Chair Powell will characterize these changes as being mark-to-market and removing dated/redundant phrasing rather than reflective of a major change in view on economic conditions, but it will be interesting to hear how he describes the decision - it does sound as though the FOMC is less concerned than it was 6 weeks ago about recession risks for example.

• Fed Funds implied rates have slipped with the FOMC decision and SEP, with the unchanged median dot for 2025 pointing to two cuts in 2H25 catching most attention.
• 2026 and 2027 median dots were shifted higher however.
• It more than reverses a nudge higher in the 90 minutes ahead of the decision, with the Dec’25 3.5bp lower post-decision.
• Cumulative cuts from 4.33% effective: 3.5bp Jul, 20bp Sep, 32.5bp Oct, 49.5bp Dec and 58.5bp Jan.
• SOFR futures steepen, with SFRZ5/Z6 back to -0.62 (+0.01) vs -0.65 pre-decision.
• The implied terminal yield of 3.235% (SFRH7) sees little change post-decision, just 0.5bp lower for -4bp on the day. It points to ~110bp of cuts remaining for the cycle.   

• Some initial pressure on the greenback has been seen on the unchanged median dot for 2025, which still sees two rate cuts this year. USDJPY drops around 40 pips and in the process takes out a collection of short-term lows ~144.40 to a 144.34 low. Higher 2026 and 2027 dots see the dollar off its worst levels against the majors, as equities also give back their initial pop higher.
• For USDJPY, overnight highs broadly matched an initial resistance level of 145.46, Jun 11 high. On the downside, the May 27 low at 142.80 is the first notable support.
• AUD and NZD remain outperformers on the session, although this is largely a function of the steep risk sell-off late Tuesday, and the subsequent recoveries today.
• EURUSD holds back above the 1.15 handle for now, outperforming the likes of GBPUSD, which has struggled to hold above 1.3450 all session. Ahead of tomorrow’s Bank of England, weak sterling price action places attention on the next important support, which lies at 1.3350, the 50-day EMA.