USD/JPY Price Forecast: V-shape recovery extends to near 158.00

USD/JPY rises to near 158.00 as the US Dollar continues to outperform.
Both the Fed and the BoJ are expected to leave interest rates unchanged this week.
This week, investors will also pay attention to key US data releases.

Sagar Dua FXStreet

The Japanese Yen (JPY) continues to underperform against the US Dollar (USD) as the latter strengthens amid caution ahead of the Federal Reserve’s (Fed) monetary policy at 18:00 GMT.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% higher to near 102.50, the highest level seen in over a week.

What to expect at the Fed meeting?

Strategists at OCBC expect the Fed to remain patient in the near term, writing that they “expect the Federal Reserve to stay on hold in October, with the focus shifting quickly to December.” They highlight that “September CPI surprised to the upside,” and note that this comes against a backdrop where “most FOMC participants had already indicated that another hike could be appropriate by year-end,” keeping attention firmly on the policy path into the final meeting of 2024.

This week, investors will also focus on the preliminary us Q3 Gross Domestic Product (GDP) and Personal Consumption Expenditure (PCE) Price Index data for September, which are scheduled for Thursday.

On the JPY front, investors await Bank of Japan’s (BoJ) monetary policy announcement on Friday. The BoJ is almost certain to hold interest rates steady at 1.25%.

USD/JPY Technical Analysis

In the daily chart, USD/JPY trades at 157.90 after a V-shape recovery, holding slightly above the 20-day exponential moving average (EMA) at 157.75, which keeps a mild bullish bias intact while the pair consolidates near recent highs. The Relative Strength Index (RSI) at 51.45 is neutral, hinting that directional momentum is modest and that bulls currently retain an edge as long as price stays above the nearby average.

On the downside, immediate support is located at the 20-day EMA around 157.75, where a daily close below would suggest a deeper correction toward the recent low near 156.00. On the upside, the pair needs a decisive break above the September 24 high near 159.00 for a fresh upside leg.

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

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 jumps to 0.7050, fresh one-month top after hot Australian CPI

AUD/USD attracts buyers for the second straight day on Wednesday, rising to a fresh high since September 23 during the Asian session. A hot Australian CPI print reaffirmed bets for an imminent RBA rate hike in November and boosted the Australian Dollar. Meanwhile, the US Dollar pauses after a three-day rally to a near two-week high ahead of the crucial FOMC rate decision, lending additional support to the currency pair.

USD/JPY sticks to modest gains above 157.50 as traders await Fed, BoJ meetings

USD/JPY attracts buyers for the third straight day, recovering further from a one-month low ahead of Wednesday’s FOMC decision and the BoJ policy update on Friday. Meanwhile, expectations that the BoJ may hold off on aggressive rate hikes weigh on the Japanese Yen, and the US Dollar advances to a nearly two-week high, supporting the currency pair.

Gold extends pullback from weekly top, further below $4,050 as focus remains on FOMC

Gold extends its retracement slide from the weekly high touched during the Asian session, falling further below $4,050 heading into the European session and ahead of the key central bank event. The US Federal Reserve is scheduled to announce its policy decision later today and is widely expected to keep rates unchanged. Hence, the focus will be on the accompanying policy statement and Fed Chair Kevin Warsh's comments during the post-meeting press conference.

Zcash's bullish momentum mounts on steady ETF inflows, retail confidence

Zcash extends steady recovery above $1,300 on Wednesday, approaching a key resistance near $1,373. Grayscale’s ZEC-focused Exchange-Traded Fund sees persistent buying pressure, with six straight days of inflows, including more than $3 million on Tuesday.

FOMC outlook: Why keeping rates unchanged might not be enough

Tomorrow's FOMC meeting could be quite interesting, even if the Federal Reserve decides to leave interest rates unchanged. According to the latest market expectations, there is currently a 92.8% probability that rates will remain at 3.75–4.00%, while the probability of another 25 basis point increase stands at just 7.2%.

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