USD/JPY drifting as Fed decision looms

  • Fed expected to pause, focus on dot plots

The Japanese yen continues to have a quiet week. In Wednesday’s North American session, USD/JPY is trading at 147.66, down 0.15%.

Fed widely expected to pause

If the Federal Reserve does not pause rate hikes at today’s meeting, it would be a massive surprise. Still, that doesn’t mean that investors aren’t paying close attention. There is particular interest as to whether the dot plot projections in June will remain the same. Those projections indicated one more hike before the end of the year and a cut in rates in 2024 to the tune of 100 basis points. Any change in the dot plot could trigger volatility from the US dollar.

Yen eyes core inflation, BoJ meeting

It has been a light week for Japanese releases, which helps explain why the Japanese yen has shown very little volatility. That could change with the Federal Reserve rate decision later today. The yen could show some stronger movement on Friday, with the release of Japan’s core CPI and the Bank of Japan policy meeting.

The Bank of Japan has insisted that inflation is transient, yet core inflation has hovered above the BoJ’s 2% target for seventeen consecutive months. That streak is likely to continue on Friday, with core CPI expected at 3.0% y/y for August, compared to 3.1% in July. The core-core CPI, which excludes fresh food and energy, is expected to accelerate to 4.4% y/y in August, up from 4.3% in July.

High inflation has put pressure on the BoJ to consider a shift from its ultra-loose policy, and there have been a few signals from BoJ members that the central bank is examining a possible exit. This has raised speculation about interest rate hikes in early 2o24, although that could be wishful thinking on the part of some market participants, as a rate hike would be nothing short of a sea-change in BoJ monetary policy.

The Bank of Japan meets on Friday and no shift in policy is expected. Still, BoJ meetings have gone from dull affairs to potential huge market movers and investors will be listening closely to Governor Ueda’s follow-up press conference, especially on inflation. Will Ueda stick to the narrative that inflation is transient or will he acknowledge that inflation is showing signs of being substantive?


USD/JPY Technical

  • There is support at 147.24, and 146.52
  • 148.56 and 149.28 are the next resistance lines

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.