USD/JPY Price Forecast - 147.6 Level Holds as Fed and BoJ Policies Collide

USD/JPY Weekly Price Structure and Market Behavior

The USD/JPY pair ended the week at 147.646, recovering from lows of 146.306 and failing to break through the 148.577 peak. The resilience comes after sharp political tremors in Japan, including Prime Minister Shigeru Ishiba’s resignation, which initially pressured the yen on speculation that leadership changes could delay a Bank of Japan policy shift. Despite these swings, the pair remained directionally firm, signaling markets are still guided by U.S. and Japanese central bank divergence.

Federal Reserve Expectations and Impact on USD/JPY

Markets are pricing a 25 bps rate cut on September 17, with Fed fund futures reflecting nearly 100% probability. The August U.S. CPI rose at the fastest pace in seven months, but the increase was in line with forecasts, keeping inflation fears contained. More critical was the surge in weekly jobless claims, the sharpest in four years, which tilted sentiment toward looser Fed policy. If the Fed signals two additional cuts in its projections, the U.S. dollar would face broad selling pressure. However, a softer easing path—just one cut through Q4—could revive greenback strength and push USD/JPY toward 150.

Bank of Japan Policy Trajectory and Yen Reaction

Japan’s Q2 GDP was revised upward to 0.5% growth quarter-on-quarter, supported by stronger household consumption at 0.4% and a rebound in external demand despite U.S. tariffs. Inflation remains above the BoJ’s 2% target, with core-core inflation still at 3.4% in July. That keeps pressure on the BoJ to normalize. Markets are split: 36% of economists expect an October rate hike, while 88% see tightening before January 2026. If national inflation on September 19 softens to the expected 2.8%, dovish bets will gain traction, weakening the yen further. But a hotter print would strengthen rate hike odds and could drag USD/JPY back to 145.

Trade Data and Machinery Orders as Key Indicators

Japan’s August trade report is expected to show exports falling 1.9% year-over-year, a modest improvement from July’s -2.6%, while imports decline 4.2% after -7.4%. A steeper decline in exports would reinforce concerns about slowing momentum in Japan’s trade-heavy economy, weakening yen demand. At the same time, machinery tool orders are projected to drop 1.7% after a 3% rise in June, a reversal that highlights cooling industrial demand. If confirmed, weaker orders and trade figures may prompt the BoJ to delay hikes. Conversely, any upside surprise in exports or capital orders could reset expectations toward an October tightening move.

U.S. Economic Releases and Near-Term USD/JPY Drivers

The U.S. calendar includes retail sales on September 16, forecast to rise 0.3% month-on-month after a 0.5% gain in July, and initial jobless claims on September 18, expected at 240k compared to 263k previously. Stronger retail sales and falling claims would dampen the case for aggressive cuts, supporting the dollar. Weak consumption and stubborn unemployment claims, however, would enhance dovish Fed bets and pressure USD/JPY lower.

Technical Setup in USD/JPY

On the charts, USD/JPY trades above the 50-day EMA but below the 200-day EMA, signaling short-term weakness within a longer-term bullish framework. Resistance sits at 149.358, with a breakout opening the path toward the August 1 peak of 150.917. On the downside, a break under the 50-day EMA would expose 146.214, with 145 as the next major floor. Volatility around these levels is expected to increase as Fed and BoJ meetings converge this week.

Strategic Assessment of USD/JPY

The yen faces a complex backdrop: political uncertainty at home, inflation still above target, and trade fragility versus external tariff headwinds. The dollar, meanwhile, trades under the shadow of Fed cuts but could regain momentum if U.S. data holds stronger than expected. With USD/JPY hovering near 147.6, the battle line is clear. A dovish Fed and softer U.S. data would push the pair down to 145, while a less aggressive cut cycle paired with weaker Japanese data could catapult the pair above 149 and back to test 150.9. Based on the balance of risks and the technical bias, the call is Hold with tactical bullish bias, expecting price to retest the upper end of the 148–150 range if U.S. retail sales and jobless claims confirm resilience.

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