USD/JPY Price Forecast: 20-day EMA acts as 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 edges higher as hot CPI inflation and hawkish RBA lift rate hike bets

The AUD/USD pair gathers strength to near 0.7035 during the Asian trading hours on Friday. The Australian Dollar edges higher against the US Dollar as hotter Australian CPI inflation data has bolstered expectations of Reserve Bank of Australia rate hikes.

USD/JPY meets support near 157.00

USD/JPY retreats for the third consecutive day on Friday, revisiting the 157.00 region before attempting some recovery as investors continue to assess the latest BoJ meeting, where the central bank left rates unchanged, as widely anticipated.

Gold sinks to fresh yearly lows despite risk-off mood as Fed rate hike bets weigh

Gold slips to fresh year-to-date lows on Friday. The metal struggles despite a risk-off mood across markets, as expectations of further Federal Reserve (Fed) interest rate hikes continue to dominate price action, leaving Gold on track to end the month in negative territory.

Ripple Price Forecast: XRP bulls defend $1.20 as sell-side pressure triggers liquidations

Ripple (XRP) trades around $1.25 on Friday, rising from a short-term support level established at $1.20. This minor upward correction follows a sharp sell-off, triggered amid reports of a hack attack on the Binance exchange that impacted approximately $6.3 billion. The attack drove the broader crypto market on edge, as Binance suspended both deposits and withdrawals to contain the situation.

BoJ recap: A pause for now... but Japan has entered a new inflation phase

The Bank of Japan left its short-term policy rate unchanged at 1.25% but delivered a distinctly hawkish message on the risk of an inflation overshoot. The decision passed by 8-1, with board member Takata dissenting in favour of an increase to 1.5%, while Governor Kazuo Ueda stressed that the Bank would continue adjusting policy as needed.

The 2% inflation target came from a throwaway remark. It now moves trillions

The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.