USD/JPY Price Forecast - Yen Climbs to ¥153.90 as Diverging Fed–BoJ Policies Drive Dollar Strength

USD/JPY extended its rally on Thursday, climbing as high as ¥153.90, its strongest level since February, after the Bank of Japan held rates steady at 0.50% in a 7–2 vote. The yen weakened across the board as Governor Kazuo Ueda signaled no preset path for further hikes, even as inflation in Tokyo is expected to tick higher. The move followed a hawkish 25 bps rate cut from the Federal Reserve, which kept investors positioned for additional dollar strength heading into November. The divergence between the Fed’s cautious easing stance and the BoJ’s ultra-slow normalization widened yield spreads in favor of the dollar, boosting USD/JPY momentum toward the ¥155.00 resistance zone.

Bank of Japan’s Decision Keeps Yen Under Pressure

The BoJ’s October policy meeting reinforced its ultra-gradual approach, maintaining the policy rate at 0.50% for a fifth consecutive session. Board members Hajime Takata and Naoki Tamura again dissented, calling for a 25 bps hike to 0.75% to prevent inflation from becoming entrenched. Despite consumer prices holding above target for over two years, the BoJ reiterated that the risk of “falling behind the curve” on inflation remains low. Updated GDP and CPI forecasts were mostly unchanged, with real GDP expected to grow 0.7% in FY2026 and inflation projected near 2%, highlighting the central bank’s reluctance to front-load rate normalization. Traders now assign 55% odds of a December hike, according to swaps data, but with wage negotiations due in March, most see a full 25 bps move by January 2026.

Fed’s Hawkish Cut Strengthens Dollar Momentum

The Federal Reserve’s October meeting delivered a 25 basis point rate cut, bringing the target range to 3.75%–4.00%, yet Chair Jerome Powell’s remarks reinforced a data-dependent stance rather than a dovish pivot. Powell warned that further cuts “are not a foregone conclusion,” a message that reignited dollar demand. The U.S. Dollar Index (DXY) climbed to 98.53, a three-month high, while 10-year Treasury yields rose to 4.11%. This combination of higher yields and resilient U.S. growth expectations continues to underpin USD/JPY buying interest.

Technical Landscape: Breakout Signals Fresh Bullish Phase for USD/JPY

Technically, USD/JPY has confirmed a strong breakout through ¥153.25–¥153.30, a zone that capped upside since early October. The move aligns with a sustained bullish structure, as RSI (14) remains above 55 without entering overbought territory, and the MACD indicator confirms a bullish crossover. Immediate resistance stands at ¥155.00, a psychological barrier aligned with the 23.6% Fibonacci retracement of last year’s September–January rally. A break above this level could open the path to ¥156.40, while near-term support emerges at ¥152.20 and ¥151.00, both prior consolidation zones that may attract dip buyers.

Japanese Data in Focus: CPI, Retail, and Industrial Output Ahead

Investors now turn to Japan’s upcoming macro releases — Tokyo CPI, Industrial Production, and Retail Sales — which could redefine expectations for the BoJ’s final meeting of the year. The Tokyo CPI is projected to rise to 2.6% YoY from 2.5%, while retail sales are expected to show modest month-over-month growth. A stronger CPI print could lift near-term rate hike bets, but given the BoJ’s dovish tone, any yen rebound may remain limited. In contrast, weaker data would reaffirm the BoJ’s wait-and-see stance and potentially push USD/JPY beyond ¥155.00 as carry traders extend long positions.