EUR/USD Falls 0.8% on Fed Hawks, USD/JPY Drops on BoJ Inflation Shift

EUR/USD has declined 0.8% to 1.0790 following the Federal Reserve's hawkish pause, with officials signaling rates may remain elevated longer than anticipated. The Fed's emphasis on persistent inflation above 3% has strengthened dollar demand across the board. Meanwhile, USD/JPY plummeted 1.2% to 148.80 after the Bank of Japan surprised markets by revising its inflation outlook upward and hinting at potential policy normalization. The BoJ's shift represents a significant departure from ultra-loose policy, with Governor Ueda suggesting negative rates could end by year-end. Technical analysis shows EUR/USD breaking below the 1.0800 psychological support, targeting 1.0750 next. USD/JPY faces strong support at 148.50, with a break potentially accelerating losses toward 147.00. The diverging central bank stances are reshaping major pair dynamics, with the dollar benefiting against European currencies while losing ground to the increasingly hawkish yen.