Dollar's Strong Breakout on Fed, BoJ Rate Hikes

The US Dollar has made up for its losses in the prior week by breaking out strongly following the Federal Reserve and Bank of Japan rate hike announcements.

USD/JPY, a major driver of global FX markets, saw a notable response to the BoJ's decision, with a stronger pullback in EUR/USD as it fell below the psychological 1.1500 level.

The carry trade, which has been a dominant theme in the market, did not receive the shock that some had anticipated from the BoJ's rate hike, and Kazuo Ueda's reluctance to provide explicit timelines for future hikes only added to the USD/JPY pair's strength.

In fact, the USD/JPY pair has been the center of attention in the FX market, with its recent rally paring back in the US session. However, this does not seem to indicate a loss of momentum for longs holding positions in the pair, which have seen prices rise by over 500 pips at one point.