• The Japanese Yen depreciated as Fed Chair Powell emphasized that 50 basis points cuts are not the "new pace.”
• The JPY’s downside could be restrained due to hawkish sentiment surrounding the Bank of Japan.
• Fed policymakers raised their long-term projection for the federal funds rate from 2.8% to 2.9%.

The Japanese Yen (JPY) has trimmed its intraday losses but remains weaker against the US Dollar (USD) on Thursday. Despite the US Federal Reserve’s (Fed) aggressive 50 basis point (bps) interest rate cut on Wednesday, the risk-sensitive JPY continued to depreciate.

Traders are now focusing on the Bank of Japan (BoJ) policy decision scheduled for Friday, with expectations that rates will be kept unchanged while leaving room for potential future rate hikes. Additionally, Japan’s National Consumer Price Index (CPI) data will be closely watched, as the inflation report could provide new insights into the BoJ’s future interest rate path.

The USD/JPY pair's upside could be attributed to remarks made by Fed Chair Jerome Powell. In the post-meeting press conference, Powell stated that the Fed is not in a hurry to ease policy and emphasized that half-percentage point rate cuts are not the "new pace."

Fed policymakers updated their quarterly economic forecasts, increasing the median projection for unemployment to 4.4% by the end of 2024, up from the 4.0% estimate made in June. They also raised their long-term projection for the federal funds rate from 2.8% to 2.9%.