The euro-dollar pair has broken below the key support level of 1.14.
Until now, it had been trading within a broad range of roughly 1.14 to 1.21.
From a technical perspective, breaking below this level suggests the pair could target the 1.07–1.08 range.

With the Fed taking a hawkish stance, the dollar looks set to surge.
President Trump’s determination to curb inflation is likely to be reflected in the foreign exchange market as well.

The USD/JPY pair is approaching its 2024 high of 161.95 yen.
Compared to the Fed, which has taken a hawkish stance under new Chair Warsh, and the ECB, which is committed to tackling inflation, the Bank of Japan’s path for future rate hikes remains unclear.
Even Keidanren Chairman Tsutsui, who has previously supported the Bank of Japan’s rate hikes, has begun to mention the risk of stagflation.

This shift is also evident in changes to the policy statement. The phrasing “real interest rates are currently at extremely low levels” has been replaced with “the current monetary environment is accommodative.”
While the tightening bias remains unchanged, the removal of the word “extremely” is significant.

The dollar-yen exchange rate plummeted around 11:07 p.m. on Monday; however, according to reports by TBS and JNN, Finance Minister Katayama held an online meeting with U.S. Treasury Secretary Bessent.
With the 2024 high of 161.95 yen looming, a break above that level could have triggered stop-loss orders and led to a sharp rally; however, news of the Katayama-Bessent online meeting quickly cooled the market.

However, given that the U.S. is taking a more hawkish stance under the new Fed Chair, and considering the direction of policy and the limits on Japan’s ability to raise interest rates, it may be difficult to halt the yen’s depreciation even with intervention.
Mr. Bessent is likely well aware of this.

Is there any way to stop the yen’s depreciation?
The only option is coordination with the U.S., but there is a possibility the U.S. will not agree.

If the rate breaks above 162 yen, it could trigger stop-loss orders and jump to the upper 162 yen range, but at the same time, there is a possibility of currency intervention.
If intervention occurs, the yen would likely fall by about 3 to 4 yen, but currency intervention alone would likely end up merely providing the market with a buying opportunity.

Even with this news, the yen did not break below 161 yen.
While intervention is likely on the upside, the downside support level is rising.
I continue to expect the dollar to strengthen.