The USD/JPY jostled in rough chart action after the Federal Reserve (Fed) left rates unchanged with additional cautionary concerns about needing the economic outlook to be more certain and better indicators that US inflation will fall to and stay at 2% moving forward. The Fed sparked a risk-off run that bolstered the US Dollar (USD) on reaction before Fed Chairman Jerome Powell teased that the Federal Open Market Committee (FOMC) unilaterally agrees that rates will need to come down this year.

Fed head Powell was careful to avoid any language about the timing of any future rate cuts, instead focusing on the need for continued improvements in reported inflation data. Money markets are now pricing in a 52% chance of no rate cut in March as swap rates pivot to focus on the odds of a first cut from the Fed in May. According to the CME’s FedWatch Tool, bets on a first Fed cut by May have spiked to nearly 95%. USD/JPY tumbled into the 146.00 handles early Wednesday, backsliding 1.22% peak-to-trough from the day’s peak bids near 147.88. The pair pulled back into the midrange below the 147.00 handle before finding additional selling pressure forcing down the USD, and the pair is testing back into its lowest prices in almost three weeks near the 146.00 handle.