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.

EUR/USD looks vacillating around 1.1800

EUR/USD alternates gains with losses around the 1.1800 neighbourhood amid marginal gains at the end of the week. The pair’s tepid move higher comes against the backdrop of a generalised lack of direction in the FX galaxy and the irresolute price action in the US Dollar.

GBP/USD slips back to daily lows near 1.3450

GBP/USD trades on the back foot on Friday, adding to Thursday’s losses around the 1.3450 region. Cable’s move lower comes amid the lacklustre performance of the Greenback in a context of a wide spread absence of volatility.

Gold flirts with four-week highs past $5,200

Gold adds to the ongoing recovery, up for the third day in a row and surpassing the $5,200 mark per troy ounce on Friday. The relentless uptick in the precious metal remains bolstered by steady geopolitical tensions and persistent uncertainty surrounding the US trade policy.

Bitcoin, Ethereum and Ripple consolidate with short-term cautious bullish bias

Bitcoin, Ethereum and Ripple are consolidating near key technical areas on Friday, showing mild signs of stabilization after recent volatility. BTC holds above $67,000 despite mild losses so far this week, while ETH hovers around $2,000 after a rejection near its upper consolidation boundary.

Changing the game: International implications of recent tariff developments

The Supreme Court ruling on International Emergency Economic Powers Act (IEEPA) tariffs provides limited relief for the rest of the world, with weighted average tariff rates modestly lower.

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.