Insights 
VT 
Key Points
- USDJPY trades near 156.72 after sliding 0.6 percent overnight toward 157.00
- Markets await Fed policy meeting and potential BOJ rate hike next week
The yen was pinned near a key resistance level on Wednesday after tumbling sharply overnight, with USDJPY hovering near 156.72. Despite speculation that the Bank of Japan may raise interest rates at its upcoming meeting, the currency struggled to find traction.
The move came without a clear trigger, highlighting how fragile sentiment remains around Japan’s low-yielding environment.
The broader narrative continues to centre on interest rate differentials. While the Fed is widely expected to cut rates by 25 basis points this week, the US still offers one of the highest nominal yields among major economies.
The 10-year Treasury yield is holding steady above 4.17 percent, maintaining upward pressure on the dollar against the yen.
Even with the Bank of Japan expected to deliver a small rate hike, markets see little chance of a sustained tightening cycle.
Japan’s fiscal stimulus plans and dovish forward guidance continue to curb bullish yen sentiment. Against other major currencies like the euro and Australian dollar, the yen also remains soft, with EURJPY near record highs and AUDJPY up 0.8 percent.
Fed Looms Large
All eyes are now on the Federal Reserve’s decision later in the day. Futures imply a 25-basis-point cut is almost certain, but the focus will shift to Chair Powell’s press conference and the 2026 dot plot.
Recent data shows US job openings remain strong, casting doubt on the depth of next year’s easing cycle.
Kevin Hassett, frontrunner to succeed Jerome Powell, stated this week that there is “plenty of room” to cut rates, but also warned that rising inflation would change the calculation.
Markets are still pricing in two more rate cuts next year, but have pulled back from more aggressive bets.
Technical Analysis
USDJPY is trading at 156.72, continuing to hover just below the recent swing high of 157.888 as bullish pressure holds firm. The pair remains well supported above the 30-day moving average, which is trending higher and providing a dynamic base around the 155.00 area.
The 5- and 10-day MAs have also just curled upward again, hinting at renewed upward momentum after a brief consolidation.
The MACD is close to a bullish crossover, with the MACD line approaching the signal line from below. While the histogram remains slightly negative, momentum is beginning to shift favourably toward buyers again.
A break and close above 158.00 would confirm trend continuation and likely open a move toward 160.00, while immediate support remains at 155.00 and stronger support near 153.50.
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