USD Price Breakout: USD/JPY Leads the Charge After Rate Hike Announcements

The US Dollar's price action has been a major focus in global FX markets this week. Despite a seemingly bullish backdrop last week, the Dollar made up for it with a strong breakout following announcements from the Fed and BoJ on their rate hikes.

USD/JPY remains the key driver in the FX market, and its response to the BoJ's decision was particularly notable. The pair saw a stronger pullback in EUR/USD as it sank below the psychological 1.1500 level.

The crowd-pleasing carry trade didn't get the shock of concern that some had anticipated, with Kazuo Ueda refraining from explicit timelines for future hikes. This contrasts with the Fed's forecast of another hike by year-end, resulting in a net strong showing for USD/JPY around FOMC and BoJ rate hike announcements.

This helped drive the USD to a fresh seven-week high. From the weekly chart, the USD remains within the same range that has been in place for over a year now. The big question for next week is whether we see another exogenous push of pressure in the crowded carry trade that still hasn't unwound.