The USD/JPY pair recovered from a dip around 146.80 during the early Asian session on Thursday (September 18th). The US dollar (USD) rebounded from a six-week low near 146.00 after the Federal Reserve (The Fed) cut interest rates by a quarter of a percentage point.

The Fed decided to cut its benchmark interest rate at its September meeting on Wednesday, the first time since December, and hinted at the possibility of further cuts this year. Fed Chairman Jerome Powell highlighted growing signs of weakness in the labor market to explain why officials decided it was time to cut interest rates after keeping them unchanged since December amid concerns over tariff-driven inflation. Powell also emphasized ongoing concerns about tariff-driven inflationary pressures.

The greenback received some support as Powell said the US central bank was in a "meeting-by-meeting situation" regarding the interest rate outlook and characterized Wednesday's move as a risk-management cut. Powell further stated that he did not see the need to move quickly on interest rates.

The resignation of Japanese Prime Minister Shigeru Ishiba has added to market uncertainty and could fuel uncertainty over the timing and pace of interest rate hikes by the Bank of Japan (BoJ). This, in turn, could weaken the Japanese Yen (JPY) and act as a boost for the currency pair.

The BoJ is expected to keep interest rates unchanged on Friday. Markets are awaiting Governor Kazuo Ueda's post-meeting press conference for signals on when the BoJ will begin raising interest rates, which have been delayed since January while officials assess the impact of tariffs. Hawkish statements from BoJ policymakers could boost the JPY in the near term. (alg)

Source: FXstreet