USD/JPY remains capped below 152.50 ahead of Fed and BoJ decisions

The US Dollar bounces up from the 152.00 area but remains capped below 152.50.
Investors are bidding their time ahead of the Fed and BoJ monetary policy decisions.
US Secretary Scott Bessent has shown his support for the BoJ's independence.

Guillermo Alcala FXStreet

The Greenback is trimming some losses against the Japanese Yen on Wednesday, yet with upside attempts limited below the 152.50 level so far. Investors are wary of placing US Dollar directional bets, awaiting the outcome of the Federal Reserve monetary policy meeting, due on Wednesday at 118:00 GMT.

The Fed is widely expected to lower rates by 25 basis points for the second consecutive time, lowering the Fed Funds rate to the 3.75% - 4.0% range. With this in mind, investors will be looking for clues to confirm market expectations of a further interest rate cut in December.

Beyond that, the US Central Bank might also announce the end of its balance sheet reduction, the so-called quantitative tightening program, amid growing concerns that credit conditions might have deteriorated too much.

The Bank of Japan, on the other side, is likely to keep interest rates unchanged at a 0.5% rate and hint at a 25 basis points rate hike, probably in December. US Treasury Secretary, Scott Bessent, has given a further boost to this view, stating that the central bank's independence is key to avoiding excessive currency volatility, adding pressure for the BoJ to keep tightening its monetary policy.

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).

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.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD trims losses and returns to the 1.1750 area

The US Dollar resumed its decline in the American afternoon, helping EUR/USD trim early losses. The pair trades around 1.1750 as market participants gear up for the European Central Bank monetary policy decision and the United States Consumer Price Index.

GBP/USD flirts with 1.3400 after nearing 1.3300

The GBP/USD changed course after dipping with UK inflation data, and trades near the 1.3400 mark, as investors expect the Bank of England to deliver a 25 basis points interest rate cut after the two-day meeting on Thursday.

Gold flirts with weekly range hurdle; looks to US CPI for fresh impetus

Gold is seen consolidating near the top end of the weekly range, below the $4,350 level, during the Asian session on Thursday. The US Dollar preserves the overnight recovery gains and caps the bullion, though a weaker risk tone and dovish Fed bets act as a tailwind for the non-yielding yellow metal. Traders now look to the US consumer inflation figures for cues about the Fed's rate-cut path in 2026 before placing fresh directional bets around the XAU/USD pair.