Japanese Yen flattens against US Dollar around 159.00 in countdown to Fed’s policy

The Japanese Yen trades calmly near 159.00 against the US Dollar ahead of the Fed’s policy announcement.
Both the Fed and the BoJ are expected to leave interest rates unchanged this week.
Global oil concerns have eased slightly following the reopening of Hormuz for some nations.

Sagar Dua FXStreet

The Japanese Yen (JPY) trades almost flat around 159.00 against the US Dollar (USD) during the Asian trading session on Wednesday. The USD/JPY pair consolidates as investors await the Federal Reserve’s (Fed) monetary policy announcement at 18:00 GMT.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, holds onto two-day’s losses around 99.50. The USD Index has corrected in the last two trading sessions after a sharp rally, as the opening of the Strait of Hormuz by Iran for some countries has slightly eased global supply concerns.

In the policy meeting, investors expect the Fed to leave interest rates unchanged again in the range of 3.50%-3.75% as the recent surge in oil prices due to Middle East conflicts has prompted inflation expectations in the United States (US) and the entire world.

Therefore, market participants will pay close attention to the Fed’s dot plot and comments regarding the monetary policy outlook. According to the CME FedWatch tool, the Fed is unlikely to cut interest rates anytime before the September policy meeting.

Meanwhile, the Japanese Yen (JPY) trades broadly firm as Bank of Japan (BoJ) Governor Kazuo Ueda has expressed confidence that prices and wages will continue to accelerate ahead of the monetary policy announcement on Thursday. “Expect underlying inflation to converge toward our target in the latter half of fiscal 2026 through fiscal 2027,” Ueda said on Tuesday.

In the policy meeting on Thursday, the BoJ is expected to leave borrowing rates steady at 0.75% while leaving the door open for further interest rate hikes.

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).

AUD/USD hangs close to monthly lows, still defends 0.7100 ahead of Fed decision

AUD/USD retains its negative bias for the third straight day, defending 0.7100 while trading close to a monthly low in Wednesday's Asian session on Wednesday. The US Dollar stands firm near a two-week high as the anticipated Fed rate hike and oil-driven inflation fears continue to push US bond yields to a multi-year high. Furthermore, escalating Middle East tensions benefit the safe-haven buck and weigh on the risk-sensitive Aussie.

USD/JPY holds firm above 155.00, awaits Fed policy announcements

USD/JPY climbs to a fresh one-week high above 155.00 in the Asian session on Wednesday amid a bullish US Dollar. Oil-driven inflation fears, along with the anticipated Fed rate hike, continue to support surging US bond yields. Moreover, rising US-Iran tensions underpin the USD's reserve currency status. The pair, however, remains below the mid-155.00s as bulls seem hesitant ahead of the Fed decision later today and the BoJ meeting, starting on Thursday.

Gold picks up pace prior to the Fed; revisits $4,350

Gold sets aside two daily declines in a row, gathering some composure and revisiting the $4,350 zone per troy ounce amid decent gains on Wednesday. The precious metal’s recovery comes despite an acceptable advance in the US Dollar and declining US Treasury yields prior to the anticipated rate hike by the Fed.

XRP Price Forecast: XRP clings to 50-day EMA support after CLARITY Act setback

Ripple (XRP) trades lower around $1.28 on Wednesday, as investors broadly assess the impact of the failed United States (US) Senate vote on the CLARITY Act and the upcoming Federal Reserve (Fed) monetary decision. The remittance token has trimmed early-week gains that tagged highs around $1.50 on Monday and now holds key moving-average support.

Federal Reserve set to raise interest rate after five meetings on hold

The United States (US) Federal Reserve (Fed) announces its interest rate decision on Wednesday, following another pivotal meeting that could provide key insights into the monetary policy outlook heading into the end of the year.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.