At the early morning FOMC meeting, the forecast for 2025 interest rates was reduced from four cuts to two. With concerns about inflation reigniting under the upcoming Trump administration, the message was aggressive, leading to a broad rise in the dollar. USD/JPY climbed from around 153.60 yen to 154.77 yen before the buying slowed down.
As U.S. long-term interest rates rose to the 4.5% range, major New York stock indices dropped sharply, creating risk-averse yen buying, which limited the rise in USD/JPY.
At today’s Bank of Japan meeting, it is expected that the policy interest rate will remain unchanged. However, with the yen weakening recently, there is a possibility that a stance favoring future rate hikes will be indicated.
While the Federal Reserve is gradually cutting rates, the Bank of Japan is expected to continue slowly raising rates. This is likely to limit the upward movement of USD/JPY.
USD/JPY Forecast Range: 155.00–152.70 yen
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