Insights 
VT 
The USD/JPY remains limited below 152.50 with market participants awaiting monetary policy decisions from the Federal Reserve (Fed) and the Bank of Japan (BoJ). The US Dollar attempts to recover against the Japanese Yen, yet struggles to maintain its momentum above 152.50.
The Federal Reserve meeting, scheduled for Wednesday at 18:00 GMT, is widely anticipated to lower rates by 25 basis points, adjusting the target range to 3.75% – 4.0%. This decision may preface further rate cuts in December, as speculated. Additionally, the Fed might end its quantitative tightening programme, in response to concerns over stringent credit conditions.
Bank Of Japan Monetary Policy Expectations
On the other side, the Bank of Japan is expected to keep rates steady at 0.5%, possibly indicating a 25 basis points increase in the future. Maintaining BoJ independence is seen as vital to control currency volatility, suggesting a push towards tighter monetary policy.
The economic indicators for both central banks reflect the broader impact on the currency market. The Fed’s actions could strengthen or weaken the US Dollar, while the BoJ’s decisions influence the Japanese Yen’s direction. These upcoming meetings highlight ongoing analysis of global financial conditions and market reactions.
The US Dollar is stuck below the 152.50 mark against the Japanese Yen as we await major policy decisions from both the Federal Reserve and the Bank of Japan. Markets are quiet, with traders hesitant to make big moves before these central bank meetings set the direction. This pause suggests a significant price swing could follow once the announcements are made.
We are expecting the Fed to cut interest rates by another 25 basis points today, bringing the target rate to 4.0%. This follows a similar cut in September 2025, a response to recent data showing US inflation cooling to 3.1% and third-quarter GDP growth slowing to 1.5%. The market will be watching closely for any signal that a third rate cut could happen in December.
Impact Of Central Bank Decisions On Currency Markets
Conversely, the Bank of Japan is anticipated to hold its rate steady at 0.5% tomorrow but signal a potential rate hike before the year ends. This continues the cautious tightening path we saw when the BoJ raised rates twice earlier in 2025 to combat its own inflation pressures. This growing difference in policy between a cutting Fed and a potentially hiking BoJ puts downward pressure on the USD/JPY pair.
The 152.50 level is a critical ceiling, partly because we remember Japanese authorities intervening to strengthen the Yen when the dollar reached similar highs back in 2024. This history makes traders nervous about pushing the pair any higher, as the risk of official selling by the Ministry of Finance is very real. For now, this acts as a strong resistance that is difficult to break.
Given the high event risk, implied volatility on USD/JPY options has likely increased, making it expensive to hold long positions. Traders positioned for a drop in the pair could consider buying put options, which would profit if the Fed’s dovish tone and the BoJ’s hawkish hint cause the dollar to weaken against the yen as expected. This strategy allows for a defined risk if the market moves unexpectedly higher.
Alternatively, traders who believe the 152.50 resistance will hold firm could look at selling out-of-the-money call options or implementing a bear call spread. This strategy would generate income from the high option premiums if USD/JPY fails to break above that key level following the central bank meetings. This is a bet that even if the news is surprising, the pair’s upside remains capped.
