USD/JPY Hits New 2026 High as Hawkish Powell Fuels Dollar Rally

USD/JPY has surged to fresh 2026 highs following the FOMC rate decision, driven by rising US Treasury yields and a hawkish tilt from Fed Chair Jerome Powell. Powell's post-meeting commentary leaned mildly hawkish, with key signals including his refusal to commit to rate cuts without clear inflation progress, a dot plot shift indicating fewer projected cuts for 2026, and an explicit unwillingness to prioritize employment concerns over inflation control. These remarks reinforced expectations that the Federal Reserve will maintain its restrictive stance longer than markets had previously anticipated, pushing US yields higher and strengthening the dollar broadly. The pair is now trading near the critical 159.45 resistance zone, with a potential extension toward the 161.95 level if bullish momentum persists. Support is established around the 157.50–158.00 area. Traders should monitor upcoming US inflation data and Japanese economic releases for further directional cues. The widening US-Japan yield differential remains the dominant driver, favoring continued USD/JPY upside in the near term.