USD/JPY (155.80) Falls Below 20-Day EMA as Yen Bulls Position for BoJ — Downside Toward 154.68 Retracement

USD/JPY is trading near 155.80, down 0.28% on Thursday, as the yen outperforms every major currency ahead of Friday's Bank of Japan decision. On the daily chart, the pair sits at 155.83, below its 20-day exponential moving average at 156.46. In Asian trading, USD/JPY briefly dipped below 156.00, reversed, then turned lower again during the European and U.S. sessions. The pair is on track to snap a three-day winning streak.

The move reverses Wednesday's Fed-driven spike. After the Federal Reserve raised rates and signaled more tightening, the yen weakened as far as 156.42 per dollar overnight, marking a two-week high for USD/JPY. From that peak to today's 155.80, the pair has dropped 62 pips, or 0.40%. The dollar is down 0.39% against the yen on the day, the second-largest dollar decline among major currencies after its 0.51% drop against the New Zealand dollar.

The broader trend favors the yen. Over the past month, the yen has strengthened 2.56% against the dollar. Over the past 12 months, it is still down 5.78%. The currency has been trading near seven-month highs, supported by expectations of more aggressive Bank of Japan tightening, the unwinding of carry trades and signs of increased asset repatriation by Japanese investors.

Intervention shaped the September path. USD/JPY traded at 156.0435 on September 4 and 155.985 on September 6. On September 7, the pair dropped to 154.352 as Japanese interventions continued to support yen strength. It fell further to 153.9985 on September 8 and 153.549 on September 9, the month's low. From that low, USD/JPY has recovered 1.47% to today's 155.80, pulled higher by U.S. Treasury yields above 5%.

The thesis for this forecast is sharp. Friday's expected Bank of Japan hike to 1.25% is fully priced and only restores the policy gap the Fed widened on Wednesday. Before the Fed hike, the gap between the Fed's range midpoint and the Bank of Japan's 1.00% policy rate stood at 262.5 basis points. After the Fed hike, it is 287.5 basis points. After a Bank of Japan hike to 1.25%, it returns to 262.5 basis points. The yen gains nothing on net from the two decisions. What moves USD/JPY from here is the tone of Bank of Japan guidance, the path of U.S. yields and the credible threat of Japanese intervention above 157.00.

The technical structure supports sellers near term. USD/JPY trades below a key resistance band at 156.60 to 156.65, where the 100-period simple moving average on the 4-hour chart meets the 50% Fibonacci retracement of the recent decline. As long as the corrective phase from the cycle peak at 160.42 remains intact, rallies remain vulnerable. First support sits at 155.78, the 38.2% retracement, two pips below today's price.

The Fed Hike That Pushed USD/JPY to 156.42

The Federal Reserve set the dollar's direction on Wednesday. The FOMC voted 12-0 to raise the federal funds target range by 25 basis points to 3.75% to 4.00%, its first hike since July 2023. The policy statement removed prior language linking elevated inflation to energy supply shocks and said the policy action would support a timelier return to the 2 percent goal.

The projections pushed the dollar higher than the hike. Sixteen of 18 officials projected at least one more quarter-point increase by year-end. The median projection for the end of 2026 rose to 4.1% from 3.8% in June, implying one more hike this year. Officials also raised their projected rate paths for 2027 and 2028.

Rate markets moved beyond the Fed's median. By Wednesday's close, money markets priced 75 basis points of additional Fed tightening by next June. Futures assigned a 50% probability to another hike at the October 27–28 meeting. A Fed with that much tightening still priced gives USD/JPY a strong yield-based floor.

The yield move was sharp at the short end. The 2-year Treasury yield rose 7.4 basis points to 4.74% on Wednesday, its highest since 2024. The 10-year yield hit 5.04% earlier this week, its highest since 2007. Wider U.S.-Japan yield differentials are the most direct headwind for the yen, because they reward investors for borrowing in yen and buying dollar assets.

Chair Kevin Warsh kept the dollar bid. He said the hike removed "a dose of accommodation" and that inflation has been too high for too long. He added that going into the meeting he was hard-pressed to describe policy as restrictive. A chair who sees no restriction after a hike signals more upside in U.S. rates.

The dollar index shows the reaction. It jumped 0.6% to 100.21 on Wednesday and touched 100.37 on Thursday, its strongest level since July 31. USD/JPY followed the broader dollar to 156.42. By Thursday afternoon, the dollar index had eased to 100.08 and USD/JPY had fallen back to 155.80. The yen is recovering faster than other currencies because traders are positioning for Tokyo.

The Bank of Japan Is Expected to Hike to 1.25%

Friday's decision is the most important yen event of the month. The Bank of Japan is widely expected to raise its policy rate by 25 basis points to 1.25% at the end of its two-day meeting. That would be the highest level since April 1995. Money markets fully price the hike, and multiple source reports have helped markets bake it in.

The case for tightening is inflation. The Bank of Japan is responding to persistent upside risks to inflation. Higher oil prices raise import costs for Japan's oil-dependent economy, and a weak yen amplifies that effect. A yen that has lost 5.78% over 12 months makes every barrel of imported crude more expensive in local currency.

Board members have leaned hawkish. Hawkish commentary from Bank of Japan members has pointed to the need for further hikes. Board member Takata has even raised the possibility of a 50-basis-point hike. A half-point move is not the base case, but its inclusion in public commentary shows the committee's direction.

Guidance matters more than the hike. With 25 basis points fully priced, the yen's reaction will depend on whether the Bank of Japan signals another increase later this year. A 25-basis-point hike alone would likely not strengthen the yen materially further. An indication that the Bank could increase the pace of tightening would. Markets are watching for guidance on the potential for another rate hike before year-end.

The global tightening wave frames the decision. The Fed hiked on Wednesday. The European Central Bank raised its deposit rate to 2.50% on September 10. The Hong Kong Monetary Authority matched the Fed with a hike to 4.25%. The Bank of England held at 3.75% on Thursday but warned policy may need to tighten. A Bank of Japan hike would make it the fourth major central bank to raise rates in eight days.

The policy gap math shows the limit. The Fed's new range midpoint of 3.875% sits 287.5 basis points above the Bank of Japan's current 1.00%. A hike to 1.25% narrows that gap to 262.5 basis points, the same spread that existed before Wednesday. With 75 basis points of further Fed tightening priced by next June, the Bank of Japan would need three more hikes in the same period just to keep the gap from widening again. That is why a single hike does not reverse the carry advantage that supports USD/JPY.

Intervention Risk Caps the Upside

Japanese authorities have been active in the currency market this summer. In late July, U.S. and Japanese authorities carried out a rare joint intervention to support the yen. Many interpreted the action as a way for Washington to help combat persistent dollar strength and address currency imbalances. That joint action changed the calculus for anyone trading USD/JPY above 157.00.

The intervention effect showed up in September. On September 7, USD/JPY dropped from 155.985 to 154.352 as Japan's interventions continued to support yen strength. The pair extended the decline to 153.549 by September 9. That 243-pip drop in three sessions marked the recent intervention-related low. Rising Treasury yields pulled the pair back up from there.

Tokyo is signaling it will act again. Finance Minister Katayama said Japan has stated its determination to address excessive volatility, referring to the joint intervention launched with the United States. Chief Cabinet Secretary Kihara said Japan will continue close talks with the U.S. Treasury to support orderly foreign exchange markets. Those comments put traders on notice that a rapid move toward 158.00 or 160.00 would draw official action.

The U.S. has taken a more active role. The U.S. Treasury has pursued a more activist approach this year, including yen intervention and increased Treasury buybacks. Joint intervention is significant because it removes the argument that Japan alone lacks the firepower to reverse dollar strength. When both governments act together, the market cannot simply bet on Japanese reserves running out.

The intervention zone sits above current prices. The recent swing high at 160.42 marks the level that preceded the intervention cycle. The 158.00 to 158.60 area marks larger resistance on the chart. A sustained break above 157.00 could open a move toward that zone. Traders know that Tokyo and Washington have already acted once in the 158 to 160 range. That knowledge sells rallies before they get there.

Intervention does not change the fundamentals. Official yen buying can reverse a move for days or weeks, but it cannot close a 262.5-basis-point policy gap. After the late-July intervention and the September 7 action, USD/JPY recovered each time as Treasury yields rose. Intervention caps the pair. U.S. yields keep lifting it back toward the cap. That is the range USD/JPY has traded all month.

Takaichi's Fiscal Push and the JGB Market

Japanese politics add a fiscal dimension to the yen. Prime Minister Takaichi said Japan cannot maintain fiscal sustainability without economic growth and that her government will accelerate policy to achieve strong growth under a proactive fiscal stance. She decided to retain ministers in charge of key policies, including economic and fiscal policy, growth strategy and areas key to diplomatic relations.

Markets read the reshuffle as continuity. The cabinet reshuffle was viewed as policy continuation and little cause for concern for the yen. Proactive fiscal policy means higher government spending. Higher spending can weaken a currency if investors worry about debt sustainability. By retaining existing ministers, Takaichi signaled no sudden shift toward larger deficits.

The Finance Ministry is managing debt issuance carefully. Katayama said Japan will review budget requests and control debt issuance at a level that can gain market credibility. A finance minister who publicly ties debt issuance to market credibility is trying to prevent a selloff in Japanese government bonds. A disorderly JGB market would weaken the yen and complicate the Bank of Japan's tightening.

JGB yields were steady overnight. The 10-year JGB yield rose 0.4 basis points after the Fed decision, a small move compared with U.S. and European bond volatility this week. Stable JGB yields mean the yield differential with Treasuries is driven almost entirely by U.S. moves. When the 10-year Treasury yield fell to 4.94% on Thursday from its 5.04% high, the differential narrowed and the yen gained.

Japan's investment ties with Washington are deepening. Japan and the United States are reportedly discussing construction of a semiconductor factory as part of the $550 billion U.S. investment package agreed during tariff negotiations. Large Japanese investment flows into the United States require yen selling and dollar buying. Those flows add structural demand for dollars that partially offsets repatriation.

Japan's pension fund is expanding its toolkit. The Government Pension Investment Fund reportedly requested alternative investment strategy expertise from South Korea's National Pension Service. GPIF's allocation decisions move enormous sums between domestic and foreign assets. A shift toward more alternative investments abroad would add yen selling pressure over time, working against the repatriation trend that has supported the yen.

U.S. Yields Above 5% and the Carry Trade

The global bond selloff is the main driver of USD/JPY. U.S. 10-year Treasury yields pushed above 5% for the first time since 2007 this week, as surging energy prices, persistent inflation concerns and heavy government borrowing unsettled fixed-income markets. The resulting rise in U.S.-Japan yield differentials is the yen's biggest headwind. It drove USD/JPY higher again after the intervention-related drop to 153.549.

The carry trade depends on that differential. Investors borrow in yen at low Japanese rates and invest in higher-yielding U.S. assets. With the Fed's range at 3.75% to 4.00% and the Bank of Japan at 1.00%, borrowing yen to buy two-year Treasuries yielding 4.74% earns a large spread. Every basis point that Treasury yields rise increases the reward and adds pressure on the yen.

Thursday's yield decline helped the yen. The 10-year Treasury yield fell to 4.94%, below the 5.04% level touched earlier this week. The move came as oil prices dropped, with WTI crude falling to $100.55 and briefly below $100 after Saudi Arabia outlined plans to restore its damaged East-West pipeline. Lower oil pulls down U.S. inflation expectations and yields together. USD/JPY's decline from 156.42 to 155.80 tracks the 10-year's retreat.

Carry trades have been unwinding. The yen's move toward seven-month highs has been supported by the unwinding of carry trades. When yen-funded positions close, investors buy back yen to repay loans, which strengthens the currency. A hawkish Bank of Japan decision on Friday could accelerate that unwind, because higher Japanese rates raise the cost of borrowing yen.

The carry unwind has global consequences. A yen carry unwind historically hits leveraged positions across risk assets, including equities and crypto. With the Nasdaq up 1.7% and Bitcoin at $76,670 on Thursday, risk appetite is recovering. A sharp yen rally after the Bank of Japan decision could reverse that sentiment quickly. Currency traders are watching USD/JPY as the transmission channel for that risk.

Repatriation adds a structural bid. Signs of increased asset repatriation by Japanese investors have supported the yen. Japan cut its U.S. Treasury holdings to $1.104 trillion in July from $1.117 trillion in June, a $13 billion reduction. When Japanese institutions sell foreign assets and bring money home, they buy yen. Higher domestic yields after Bank of Japan hikes make repatriation more attractive, reinforcing the trend.

Oil Prices and Japan's Import Bill

Energy prices hit the yen directly. Japan imports almost all of its oil and much of its gas. Rising oil prices increase import costs for Japan's oil-dependent economy and pressure the yen by widening the trade deficit. This week's energy spike added to the yen's weakness before the Fed decision.

Crude spiked early in the week. WTI settled at $105.83 on Tuesday, its highest close since May 19, and Brent settled at $108.75. Saudi Arabia shut its East-West pipeline after a drone attack on September 11, and Houthi strikes on Saudi cities added supply fears. For Japan, each dollar increase in crude prices adds to the import bill paid in dollars, which requires yen selling.

The reversal is helping the yen now. Brent fell 2.7% to $105.83 on Wednesday and extended its decline to $103.05 on Thursday. Saudi Arabia is aiming to restore half of its pipeline capacity within days and has increased ship-to-ship transfers near Oman to 2.7 million barrels per day. China has asked Iran to help stop Houthi attacks on Saudi infrastructure. Lower crude reduces Japan's import costs and supports the yen through the trade channel.

Freight costs remain a drag. The cost of shipping crude to Asia hit records this week, with a very large crude carrier from the U.S. Gulf Coast to China costing $44.8 million. Tanker rates topped $1 million per day for the first time. Japan pays those freight costs on every imported cargo. Even with crude prices falling, the delivered cost of oil to Japan remains elevated.

Regional oil prices show where the pressure sits. Oil futures in Shanghai traded at $129 per barrel on Wednesday, above their early-war peak of $121.80. Asian buyers are paying a premium for secure supply. Japan competes with China for Gulf crude, and that competition raises Japan's energy costs relative to the global benchmark.

The diplomatic calendar sets the next move. President Trump is expected to meet Gulf leaders next Tuesday at the UN General Assembly to discuss next steps in the Iran war. A ceasefire would crash oil prices, cut Japan's import bill and lower U.S. yields at the same time. That combination would be strongly yen-positive. A breakdown would send oil higher and push USD/JPY back toward 157.00.

The Dollar Side: Labor Data and Fed Speakers

U.S. economic data supports the dollar's floor. Initial jobless claims fell to 196,000 in the week ended September 12, down from 206,000 and well below the 208,000 forecast. Continuing claims fell to 1.730 million. A labor market that strong backs the Fed's decision to hike and its projection of another increase this year.

Consumer spending is strong. August retail sales rose 1.2%, beating the 0.7% forecast, and control-group sales jumped 1.4%, the fastest pace since September 2024. The Atlanta Fed's GDPNow estimate for the third quarter rose to 5.1% annualized after the report. Strong U.S. growth supports higher U.S. yields, which supports USD/JPY.

Housing is the soft spot. August housing starts fell 2.6% to a 1.275 million annual rate, below the 1.309 million forecast. Building permits fell 2.7% to 1.394 million. Homebuilder sentiment dropped to a 12-month low. Higher rates are hitting housing, which could slow the economy over time and reduce the need for further Fed hikes.

Inflation keeps the Fed on track. U.S. consumer prices rose 3.4% year over year in August, with core inflation at 2.4%. The Philadelphia Fed survey showed prices paid jumping to 48.6 from 40.9 in September. Rising input costs support the Fed's hawkish projections and limit how far U.S. yields can fall.

Friday's Fed speakers carry dollar risk. Governor Michelle Bowman speaks at 9:30 a.m. ET and Kansas City Fed President Jeffrey Schmid at 11:45 a.m. ET, the first officials to comment after the hike. The blackout period has ended. Hawkish remarks that push October hike odds above 50% would lift Treasury yields and USD/JPY. Softer remarks would extend the yen's recovery.

The White House is watching rates. President Trump posted that U.S. rates should be 1% or less but said he had confidence in Warsh and had told him to act independently. The administration's joint intervention with Japan in July shows Washington is willing to act on dollar strength. That political dimension adds another layer of resistance to USD/JPY rallies.

The September Path: From 156.04 to 153.55 and Back

USD/JPY's September trading shows a clear cycle. The pair started the month near 156.00, trading at 155.8045 on September 3 and 156.0435 on September 4. It held at 155.985 on September 6. Treasury yields were rising, and the pair was pressing toward the upper end of its range.

The intervention broke that advance. On September 7, USD/JPY dropped to 154.352 as Japanese interventions continued to support the yen. The decline extended to 153.9985 on September 8 and 153.549 on September 9. From the September 4 level of 156.0435 to the September 9 low, the pair lost 249 pips, or 1.60%.

Yields pulled it back. On September 10, USD/JPY rose to 154.436. The 10-year Treasury yield climbed toward 5% on hot U.S. producer prices and rising oil. By September 15, the pair had recovered toward 155.00, with a clean break above the 153.30 to 155.00 area targeting a continuation move toward 156.00 to 157.00.

The Fed completed the recovery. On Wednesday, the Fed's hike and hawkish dot plot pushed USD/JPY to 156.42 overnight, a two-week high. From the September 9 low to that peak, the pair rallied 287 pips, or 1.87%. The recovery erased more than the entire intervention-driven decline.

Thursday's reversal marks the Bank of Japan positioning. USD/JPY fell back to 155.80 as traders priced a hawkish Tokyo decision. The pair is now within 24 pips of where it started the month. September's round trip shows a market caught between intervention and yield differentials, with neither force winning decisively.

The monthly range defines the trading plan. The top of the range is 156.42, the post-Fed high. The bottom is 153.549, the intervention low. The midpoint is 154.98. Today's 155.80 sits in the upper third of that range, 82 pips above the midpoint. A move below 155.00 would put the yen on the stronger side of its monthly structure. A daily close above 156.65 would put the pair back on track toward 157.00.

Support Map: 155.78, 155.00 and 154.68

Three levels define the downside. The first is 155.78, the 38.2% Fibonacci retracement of the move from the cycle peak. USD/JPY trades two pips above it. A break below 155.78 would confirm that Thursday's yen strength is extending into a new leg lower rather than stalling at a technical level.

The second is 155.00. That round number marked the upper boundary of the 153.30 to 155.00 zone that capped the pair in mid-September before the Fed decision. Former resistance that broke on the Fed rally can act as support on a retest. From today's price, 155.00 is a 0.51% decline, or 80 pips.

The third is 154.68, the 23.6% Fibonacci retracement. From today's price, it is a 0.72% decline. A move to 154.68 would erase the entire post-Fed rally and the recovery from September 10. The trigger would be a hawkish Bank of Japan decision that signals another hike this year, combined with softer Fed commentary on Friday.

Below 154.68, the intervention zone comes back into view. The September 9 low at 153.549 sits 1.44% below today's price. The 153.30 level, the bottom of the mid-September range, is a 1.60% decline. The structural floor near 152.91 is a 1.85% decline. Reaching those levels would require a sustained yen rally driven by carry-trade unwinding, a sharp drop in U.S. yields and continued repatriation flows.

The yen's momentum supports a test of 155.00. The pair trades below its 20-day exponential moving average at 156.46 and below the 156.60 to 156.65 resistance band. The dollar is falling against the yen by more than against the euro, Swiss franc or Canadian dollar. Traders are positioning for Tokyo, and positioning ahead of a fully priced event often extends until the event arrives.

The risk to the support structure is a disappointing Bank of Japan. If the Bank delivers the 25-basis-point hike but offers no signal of further tightening, traders who bought yen into the decision would sell. That "sell the fact" reaction could push USD/JPY back above 156.00 within hours. Support below 155.78 is only as strong as Friday's guidance.

Resistance Stack: 156.46, 156.65, 157.55 and 158.60

The upside has four layers of resistance. The first is 156.42 to 156.46, where Wednesday's post-Fed high meets the 20-day exponential moving average. USD/JPY trades 62 to 66 pips below that zone. A daily close above 156.46 would reclaim the short-term trend barrier and neutralize Thursday's decline.

The second is 156.60 to 156.65. That band combines the 100-period simple moving average on the 4-hour chart with the 50% Fibonacci retracement. It is the most important resistance on the chart. From today's price, 156.65 is a 0.55% gain. As long as USD/JPY trades below it, the corrective phase from the 160.42 peak remains intact.

The third is 157.00 to 157.55. The 157.00 level marks the top of the continuation target zone from mid-September. The 61.8% Fibonacci retracement sits at 157.55, a 1.12% gain from today. A sustained break above 157.00 would signal that U.S. yields are overpowering the Bank of Japan and intervention risk.

The fourth is the 158.00 to 158.81 zone. The larger resistance area between 158.00 and 158.60 marks the start of the territory where authorities have acted before. The 78.6% retracement sits at 158.81, a 1.93% gain. Above that, the swing high at 160.42 sits 2.97% above today's price. Tokyo and Washington's joint intervention in late July makes any approach toward 160.00 a high-risk trade for dollar buyers.

Each resistance level has a clear trigger. Reclaiming 156.46 needs only a disappointing Bank of Japan decision without forward guidance. Breaking 156.65 needs that disappointment plus hawkish Fed commentary on Friday. Clearing 157.55 needs the 10-year Treasury yield to rise back above 5.04%. Reaching 158.60 needs oil to spike above $105 again while the Fed signals an October hike.

The resistance stack is tighter than the support structure. From today's price, 156.46 is 66 pips away and 156.65 is 85 pips away. Support at 155.00 is 80 pips away. The distances are close to balanced. The intervention threat above 157.00 tilts the risk-reward toward sellers, because the upside carries a policy ceiling while the downside carries only technical support.

Three Scenarios: Hawkish Tokyo, Priced-In Hike, Dovish Surprise

The hawkish Tokyo scenario targets 155.00, then 154.68. It requires the Bank of Japan to raise rates to 1.25% and signal another hike later this year, or deliver a 50-basis-point move. Softer Fed commentary on Friday and a 10-year Treasury yield below 4.90% would reinforce the move. In that case, USD/JPY breaks 155.78 on the decision, tests 155.00 within the session and extends toward 154.68 early next week. A carry-trade unwind could push the pair toward the 153.549 September low.

The priced-in hike scenario is a 155.00 to 156.65 range. The Bank of Japan raises rates to 1.25% as expected, keeps guidance data-dependent without committing to another move, and the Fed speakers stay close to the dot plot. USD/JPY swings in both directions on the headline, then settles near 155.80 as the market concludes the policy gap has only returned to its pre-Fed level. U.S. yields and oil prices drive the pair through the October Fed meeting.

The dovish surprise scenario targets 156.65, then 157.55. It requires the Bank of Japan to hold rates or hike without any hawkish signal, while the 10-year Treasury yield climbs back toward 5.04%. Traders who bought yen into the decision would unwind positions. A daily close above 156.65 confirms this path. Intervention risk above 157.00 would likely cap the move before 158.60.

The probability weighting favors the priced-in scenario with a bearish tilt for USD/JPY. The Bank of Japan hike is fully priced, and board members have leaned hawkish enough to suggest guidance toward further tightening. The yen is outperforming ahead of the decision. Joint U.S.-Japan intervention has capped rallies above 157.00. Those factors favor yen strength. The 262.5-basis-point policy gap and 75 basis points of priced Fed tightening limit how far the yen can run.

The calendar sets the checkpoints. The Bank of Japan decision arrives Friday during Asian trading, followed by Governor-level guidance. Fed Governor Bowman and Kansas City Fed President Schmid speak later Friday. Next Tuesday, the President meets Gulf leaders on the Iran war. The Fed decides again on October 28. Each event can shift the rate gap or intervention calculus.

The largest downside risk for USD/JPY is a coordinated shock: a hawkish Bank of Japan, a Middle East ceasefire that crashes oil and U.S. yields, and a carry unwind across global markets. That combination could send the pair through 152.91. The largest upside risk is a Bank of Japan hold combined with a U.S. inflation shock that pushes Treasury yields to new highs. That would test the intervention zone above 158.00. USD/JPY at 155.80 is priced for neither.

USD/JPY Price Forecast Verdict: Bearish Tilt Below 156.65, 155.00 Target

USD/JPY enters Friday's Bank of Japan decision at 155.80, down 0.28% on the day, after the Fed's hike pushed it to a two-week high of 156.42 overnight. The yen is outperforming every major currency as traders position for a hike to 1.25%, the highest Bank of Japan rate since April 1995. The pair trades below its 20-day exponential moving average at 156.46 and below the 156.60 to 156.65 resistance band.

The yen's support is building. The currency has strengthened 2.56% over the past month and sits near seven-month highs. The Bank of Japan hike is fully priced, board members have leaned hawkish, and one member has floated a 50-basis-point move. Carry trades are unwinding, Japanese investors are repatriating assets, and Japan cut its Treasury holdings to $1.104 trillion. U.S. and Japanese authorities intervened jointly in late July, and Finance Minister Katayama reaffirmed Japan's determination to address excessive volatility. Oil fell to $103.05 on Brent, cutting Japan's import bill.

The dollar's floor is real. The Fed raised rates to 3.75% to 4.00%, 16 of 18 officials project another hike, and money markets price 75 basis points of tightening by next June. The 2-year Treasury yield sits at 4.74%. A Bank of Japan hike to 1.25% only restores the 262.5-basis-point gap that existed before Wednesday. Weekly jobless claims fell to 196,000, and third-quarter growth is tracking at 5.1%.

The forecast is a bearish tilt with a defined line. First support sits at 155.78, then 155.00, with 154.68 as the near-term target and the 153.549 September low as the extended level. Resistance holds at 156.42 to 156.46, the 156.60 to 156.65 band, and 157.55. A daily close above 156.65 invalidates the bearish tilt and opens a move toward 157.00 and 157.55.

The trigger is Bank of Japan guidance. A hike to 1.25% with a signal of further tightening this year confirms a break below 155.78 and a move toward 155.00 and 154.68. A hike without guidance, or hawkish Fed commentary that lifts Treasury yields back above 5.04%, sends USD/JPY back through 156.46 toward 156.65.

Verdict: bearish bias below 156.65, targeting 155.00 near term and 154.68 on hawkish Bank of Japan guidance, with the forecast invalidated on a daily close above 156.65.

That's TradingNEWS