Key Points
- USD/JPY rose towards the 156.00 area after the Federal Reserve delivered a 25 basis point rate hike, supporting the US dollar.
- The Fed raised its benchmark rate to 4.00%, meanwhile markets are already expecting another rate hike this year.
- Fed Chair Kevin Warsh highlighted inflation risks, reinforcing expectations that US rates may remain elevated for longer.
- The pair has eased from its post-FOMC high as traders shift attention towards the Bank of Japan’s September 18 policy decision.
- USD/JPY is testing the 156.00 area, with this level acting as a key short-term pivot ahead of the BoJ meeting.
Market Move
USD/JPY is trading around 156.130, down 0.10% in the latest session.
The pair initially pushed higher after the Federal Reserve’s hawkish rate decision, reaching an intraday high near 156.314 before sellers emerged. The pullback brought USD/JPY towards a session low of 155.875, showing some profit-taking post FOMC.
USD/JPY recovered from the intraday low and moved back above the 156.00 psychological level. The pair is now trading slightly above its 9-period moving average, suggesting short-term momentum has stabilised after the earlier decline.
Why Traders Are Watching
Attention has shifted from the Federal Reserve’s rate decision to the Bank of Japan’s next policy move.
The Fed’s latest move reinforced the interest rate gap between the US and Japan, supporting USD/JPY. A higher-for-longer US rate outlook could continue to provide support for the pair, particularly if Treasury yields remain elevated.
However, expectations for further BoJ tightening may limit yen weakness. Markets are watching for signals of further policy normalisation after the expected rate increase.
Key Trading Levels
| Level | Price Area | Significance |
| Resistance 2 | 156.30–156.35 | Intraday high zone and immediate upside barrier |
| Resistance 1 | 156.2 | Short-term recovery area |
| Pivot | 156 | Key psychological level |
| Support 1 | 155.9 | Session low area |
| Support 2 | 155.5 | Potential downside target if selling accelerates |
USD/JPY remains centred around the 156.00 pivot.
A move above 156.30 could signal renewed buying interest towards higher levels, while a break below 155.90 may expose the pair to further downside pressure.
Bullish and Bearish Setups
| Scenario | Conditions | Potential Direction |
| Bullish Setup | USD/JPY holds above 156.00 and breaks above 156.30 | Opens the way towards 156.80 and 157.00 |
| Bearish Setup | USD/JPY falls below 155.90 with sustained selling pressure | Risks a move towards 155.50 and 155.00 |
The bullish scenario depends on USD/JPY maintaining the 156.00 support zone after the price rebound, driven by the Fed rate hike.
The bearish scenario would develop if the pair fails to hold above 156.00 and breaks below 155.90.
This could indicate traders are expecting the yen to strengthen ahead of the BoJ meeting.
Disclaimer
The price levels and market scenarios above reflect the author’s assessment at the time of writing. They do not represent financial advice or an official recommendation from VT Markets. Traders should conduct their own analysis and manage risk carefully.
USD/JPY Prediction: What’s Next?
The 156.00 level remains a key level for the USD/JPY pair.
A move above 156.30 could extend the recovery towards 156.80–157.00, particularly if US rate expectations remain stable.
However, downside risks remain ahead of the BoJ decision. A more hawkish signal from the BOJ could reinforce expectations for further rate hikes, strengthening the yen and putting pressure on USD/JPY, pushing the pair below 155.90, bringing 155.50 into focus.
The next major factor to monitor closely would be BOJ’s policy decision.
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FAQ
Why did USD/JPY rise after the Fed decision?
USD/JPY gained after the Federal Reserve raised interest rates by 25 basis points and maintained a hawkish outlook, supporting the US dollar.
What is the key level for USD/JPY now?
The 156.00 area is the key short-term level. Holding above it may support further recovery, while a break below could increase downside pressure.
How could the BoJ decision affect USD/JPY?
A more hawkish BoJ stance could support the yen and weigh on USD/JPY, while a cautious approach to future tightening may limit yen gains.
What levels should traders watch for USD/JPY?
Traders are watching 156.30 as immediate resistance and 155.90–156.00 as the main support zone based on the current chart structure.
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