USD/JPY pauses before Fed call – BoJ rate hike speculation builds
|- USD/JPY eases after 3-day winning streak.
- MACD tries to overcome its trigger line.
- Stochastic enters overbought region.
USD/JPY edged slightly lower on Wednesday ahead of the Federal Reserve’s interest rate decision later today, with the pair hovering below the 157.00 level after a sharp three-day increase. Sentiment was also influenced by comments from Bank of Japan Governor Kazuo Ueda, who signaled that the central bank is nearing its inflation target, fueling speculation of a possible rate hike as early as next week. Markets remain focused on Ueda’s post-meeting remarks for clues on the BoJ’s policy trajectory into 2026.
The pair is trading well above the short-term uptrend line and the 20-day simple moving average (SMA) at 155.90, with potential to reclaim the ten-month high of 157.90. If the rally extends, gains could pause near the 158.86 resistance.
On the downside, a rebound off 154.30 is expected if a correction occurs. However, deeper losses could lead traders to test the 50-day SMA at 153.80 ahead of the 152.80 support level.
From a technical standpoint, the MACD is flirting with its trigger line above the zero area, while the stochastic oscillator is ticking up above the 80 level, suggesting bullish momentum remains intact.
Overall, USD/JPY maintains a strong bullish bias, supported by technical indicators and market expectations of diverging monetary policies. However, volatility may increase following the Fed’s decision and any signals from the BoJ, keeping traders alert for potential breakout or correction scenarios.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.