USD/JPY Price Forecast: 20-day acts key barrier near 156.45

USD/JPY falls to near 155.80 as the Japanese Yen trades higher.
The BoJ is expected to raise interest rate by 25 bps to 1.25% on Friday.
The Fed is expected to deliver more interest rate hikes this year.

Sagar Dua FXStreet

The Japanese Yen (JPY) outperforms its major currency peers on Thursday, with the USD/JPY trading 0.28% lower to near 155.80. The Asia-Pacific currency gains on expectations that the Bank of Japan (BoJ) will remain on the monetary tightening path even after raising interest rates by 25 basis points (bps) to 1.25% on Friday.

Danske Bank sees BoJ hiking and signalling nimbler tightening

Analysts at Danske Bank expect the BoJ to deliver a further rate increase, stating that “we expect the Bank of Japan to hike its policy rate to 1.25%.” They note that “the move has largely been priced in by investors as market pricing has tightened significantly during recent weeks” and add that they “do not expect Governor Ueda to push against that.”

Looking beyond the decision itself, Danske Bank anticipates a shift in the communication around the policy path, saying “we expect BoJ will signal a nimbler approach to the tightening pace than the very cautious hiking cycle we have witnessed so far.” In their view, “anything else will weigh heavy on the yen,” underscoring the currency’s sensitivity to how the central bank frames its next steps.

Meanwhile, the US Dollar corrects after failing to extend its three-day winning streak. On the monetary policy front, the Federal Reserve (Fed) signaled in the policy meeting on Wednesday that more interest rate hikes are likely this year.

The Fed’s dot plot showed that 16 of 18 members see atleast one more interest rate hike this year.

USD/JPY Technical Analysis

In the daily chart, USD/JPY trades at 155.83, maintaining a bearish near-term bias as spot holds beneath the 20-day exponential moving average (EMA) at 156.46. The pair has failed to reclaim this short-term trend barrier, keeping price action capped despite a modest recovery in the Relative Strength Index (RSI), which has bounced from oversold territory toward a more neutral 43.79, hinting at cooling downside pressure rather than a clear reversal.

On the topside, immediate resistance is located at the 20-day EMA at 156.46, which acts as the first hurdle for any corrective bounce. Looking down, the September 8 low at 152.89 is the key support level.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Economic Indicator

BoJ Interest Rate Decision

The Bank of Japan (BoJ) announces its interest rate decision after each of the Bank’s eight scheduled annual meetings. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and raises interest rates it is bullish for the Japanese Yen (JPY). Likewise, if the BoJ has a dovish view on the Japanese economy and keeps interest rates unchanged, or cuts them, it is usually bearish for JPY.

AUD/USD gains traction near 0.7100 as the post-Fed USD rally pauses

AUD/USD finds fresh buyers and retakes 0.7100 in the Asian session on Thursday as the US Dollar pauses its hawkish Fed-inspired rally to its highest level since late July. However, RBA rate-hike bets and hopes for US-Iran diplomatic efforts lift risk sentiment and support the risk-sensitive Australian Dollar and the major.

USD/JPY reverses a dip below 156.00 as focus shifts to BoJ

USD/JPY is reversing a brief dip below 156.00 in the Asian session on Thursday, looking to snap a three-day winning streak to a nearly two-week top set the previous day. The US Dollar pauses following the post-Fed rally to seven-week highs, while a more hawkish repricing of the BoJ's policy normalization path supports the Japanese Yen. This keeps the pair's upside limited, with the focus now shifting to the BoJ policy decision due on Friday.

Gold extends fragile recovery from multi-week low as softer bond yields weigh on USD

Gold builds on its intraday ascent through the first half of the European session, and recovers further from a near six-week low, touched the previous day. A modest pullback in US Treasury bond yields prompts some US Dollar profit-taking, which is seen offering support to the commodity. However, the Federal Reserve's hawkish outlook, along with escalating Middle East tensions, should limit deeper losses for the safe-haven Greenback and cap the non-yielding bullion.

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The Fed hawkishly hiked rates

The Fed proceeded with its first rate hike since 2023, as was widely expected. It should be noted that the bank hiked rates against US President Trump’s wishes. It’s characteristic that Fed Chair Warsh stated that 'Inflation is too high and has been for too long’, signalling his hawkish intentions.

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.