USD/JPY Price at 146.80: Fed Cuts Rates, BoJ Holds at 0.5%, Traders Watch 145–150 Range

USD/JPY Reacts to Fed Cut and BoJ Status Quo

The USD/JPY pair trades around 146.80 after a volatile week dominated by the Federal Reserve’s 25 bps rate cut and anticipation of the Bank of Japan’s policy stance. The Fed lowered rates to 4.00%–4.25% and signaled two more cuts before year-end, with Chair Powell emphasizing labor market weakness but leaving inflation forecasts at 3.1% for 2025. The dollar briefly spiked before settling, as investors recalibrated expectations. Across the Pacific, the BoJ is expected to leave rates unchanged at 0.50%, holding its cautious line despite inflation still running above wage growth. The divergence between the Fed’s easing path and Japan’s tentative tightening outlook has kept the pair in a narrow but tense trading band.

Political Instability and Trade Deals Shape Yen Outlook

Japan’s political backdrop adds complexity, with the Prime Minister stepping down and elections set for October 4. This leadership vacuum discourages aggressive BoJ action. At the same time, a new U.S.-Japan trade deal reassures policymakers that tariffs won’t immediately push Japan into recession, giving the BoJ more room to wait. Market pricing reflects this: traders assign roughly 50% odds of a 25 bps hike by March 2026, with gradual tightening expected over the next 18 months. For now, Governor Ueda’s communication is the swing factor—any hint of a shift could spark outsized yen strength.

USD/JPY Technical Battleground Between 145 and 150

Technically, USD/JPY remains locked between 145.00 support and 150.00 resistance. The 146.25 level has been tested repeatedly, with sellers pressing for a break lower. A decisive close under this level would expose 145.00 and then 143.30 as downside targets. On the upside, the 50-day moving average at 147.67 and the 200-day at 148.62 cap near-term rallies. A breakout above 148.60 would re-open the path toward 150.00 and possibly 150.77, the summer high. The pair’s inability to escape this band despite Fed easing underscores the market’s sensitivity to both central banks’ forward guidance.

Fed-Boj Divergence Drives Carry Dynamics

The rate differential remains the central driver of USD/JPY. With the Fed signaling 50 bps of cuts by December and the BoJ likely holding or hiking modestly, medium-term pressures tilt against the dollar. That said, the yen’s traditional safe-haven status has been muted by Japan’s ultra-low yields and ongoing QE unwind. Hedge funds remain net long USD/JPY, reflecting carry trade support, but positioning leaves the market vulnerable to sharp reversals if U.S. data underperforms.

Market Positioning and Short-Term Catalysts

Speculators remain cautious, with many betting that USD/JPY holds within 146.30–147.35 near term. U.S. jobless claims, upcoming Japanese CPI data, and Ueda’s press conference will dictate direction. Should U.S. labor softness accelerate, the dollar leg of the pair weakens. Conversely, any delay in BoJ hikes prolongs yen underperformance, encouraging a retest of 148.60–150.00.

Verdict on USD/JPY

At current levels near 146.80, USD/JPY is range-bound but leaning toward a bearish bias over the next 3–6 months. The combination of Fed easing and possible BoJ tightening by early 2026 suggests the yen will gradually strengthen. For traders, the strategy is Sell on rallies toward 148.60–150.00, with downside targets at 145.00 and then 143.30. Only a break above 150.77 would shift the bias back to bullish continuation.

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