USD/JPY Dips to 146.20 Ahead of Fed Policy Decision.
USD/JPY dips toward 146.20 as traders await Fed policy decision
FUNDAMENTAL OVERVIEW:
The USD/JPY pair extended losses to trade near 146.20 during Wednesday’s European session, weighed down by cautious US Dollar (USD) sentiment ahead of the Federal Reserve’s policy decision at 18:00 GMT. The US Dollar Index (DXY) lingered near 96.60, holding onto Tuesday’s declines.
The Greenback has remained under pressure in recent weeks as markets increasingly price in Fed rate cuts. According to the CME FedWatch tool, traders assign a 96% probability of a 25-basis-point reduction to 4.00%–4.25%, with a smaller fraction betting on a deeper 50-basis-point cut. Dovish expectations have been amplified by US labor market concerns, particularly after benchmark revisions revealed 919k fewer jobs were created in the 12 months through March 2025 than previously estimated.
Looking ahead, the Japanese Yen (JPY) could see fresh drivers from Friday’s August CPI release and the Bank of Japan’s policy decision, where the central bank is widely expected to keep rates unchanged at 0.5%.
USD/JPY TECHNICAL ANALYSIS CHART:
Technical Overview:
USD/JPY is trading within a down channel.
USD//JPY is moving below all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Bearish Zone, while the Stochastic oscillator suggests a Negative trend.
Immediate Resistance level: 147.03
Immediate support level: 146.16
HOW TO TRADE USD/JPY
USD/JPY initially declined but found support, prompting a sharp rebound that drove the pair higher and even broke through key resistance. However, the upside move proved short-lived as price reversed lower and is now testing a critical support zone. A decisive break below this level could open the door for further downside.