USD/JPY Price Forecast: What Next as the V-Shaped Recovery Extends Towards 158.00?

Continued US Dollar outperformance lifts USD/JPY towards 158.00.
Interest rates are expected to remain on hold at both the Fed and the BoJ this week.
Key US economic releases are also on investors’ radar this week.

The Japanese Yen (JPY) remains under pressure against the US Dollar (USD), with the Greenback gaining ground as markets turn cautious ahead of the Federal Reserve’s (Fed) monetary policy announcement at 18:00 GMT.

At the time of writing, a 0.1% advance has taken the US Dollar Index (DXY) to around 102.50, its highest reading in over a week. The index measures the Greenback against six major currencies.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Will the Fed keep rates on hold?

A patient near-term approach remains the expectation of strategists at OCBC, who write that they “expect the Federal Reserve to stay on hold in October, with the focus shifting quickly to December.” Their observation that “September CPI surprised to the upside,” sits alongside the fact that “most FOMC participants had already indicated that another hike could be appropriate by year-end,” leaving the policy trajectory towards the final meeting of 2024 firmly in focus.

Thursday’s scheduled releases of preliminary US Q3 Gross Domestic Product (GDP) and September’s Personal Consumption Expenditure (PCE) Price Index will also draw investor attention this week.

For the JPY, the next policy announcement from the Bank of Japan (BoJ) is due on Friday, with investors awaiting the decision. A hold at 1.25% is considered almost certain.

Can USD/JPY extend its recovery?

A V-shaped recovery has brought USD/JPY to 157.90 on the daily chart, just above its 20-day exponential moving average (EMA) of 157.75. This position preserves a mildly bullish bias as the pair consolidates close to recent highs. At 51.45, the Relative Strength Index (RSI) remains neutral, signalling limited directional momentum; nevertheless, buyers retain an advantage while the price holds above the nearby average.

A decisive move through the 24 September high near 159.00 is needed to open a fresh leg higher. Below current levels, the 20-day EMA around 157.75 offers immediate support. A daily close beneath it would point to a deeper correction towards the recent low near 156.00.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Economic Data Indicator

Will the Fed Change Interest Rates?

At eight scheduled meetings each year, the Federal Reserve (Fed) reviews monetary policy and decides on interest rates. Its dual mandate is to maintain full employment and keep inflation at 2%. To meet these objectives, it primarily sets the rates at which it lends to banks and at which banks lend to one another. A rate increase typically supports the US Dollar (USD) by drawing in more foreign capital. Conversely, a rate cut tends to weigh on the USD as capital moves to countries offering higher returns. When rates stay on hold, markets focus instead on the tone of the Federal Open Market Committee (FOMC) statement: a hawkish stance points to expectations of higher future interest rates, while a dovish stance points to expectations of lower future rates.

Learn more.

Upcoming release: Wed 28 October 2026 18:00

Release frequency: Irregular

Consensus estimate: 4%

Previous reading: 4%

Data source: Federal Reserve