USD/JPY Price Holds at ¥147 as Fed Cut Bets Clash With BoJ Hawkishness

USD/JPY Price Forecast: Dollar-Yen Rangebound at 147 After Powell’s Dovish Shift

The USD/JPY (JPY=X) pair is trapped in one of its tightest ranges of the year, hovering between 146.00 and 148.80 as traders digest the fallout from Jerome Powell’s Jackson Hole speech and recalibrate expectations for a September Fed rate cut. The currency pair opened the week around ¥147.10, with repeated defenses of the 147.00 level underscoring how sensitive the market remains to shifts in U.S. monetary policy and Bank of Japan guidance.

Fed Cut Bets Dominate Dollar-Yen Moves

The clearest driver for USD/JPY remains Fed rate-cut pricing rather than bond yields or spreads. Fed funds futures now assign a 91% probability of a September cut after Powell’s dovish remarks, which emphasized risks to the labor market and downplayed tariff-driven inflation. Every time the futures curve has priced deeper cuts, USD/JPY has slipped, and vice versa when cut expectations have eased. This correlation is stronger than with short-term Treasury yields or volatility indices, making the September FOMC meeting the defining catalyst.

FOMC Composition Adds Political Risk

An undercurrent shaping USD/JPY is political interference in the Federal Reserve. Donald Trump’s attacks on Fed Governor Lisa Cook, tied to allegations of mortgage fraud, highlight the risk of further reshaping the FOMC in favor of rapid easing. With three Trump-aligned governors already pushing for cuts, Cook’s departure would tilt the board toward a dovish majority. That outcome would weaken the dollar significantly, as traders would price in not just a September cut but potentially 75–100 basis points by year-end.

BoJ Hawkish Signals Contrast Powell’s Pivot

On the other side of the pair, the Bank of Japan remains committed to normalizing policy. Governor Kazuo Ueda recently reinforced the case for higher rates, pointing to tight labor markets and sustained wage growth. The Tokyo CPI, due later this week, could be decisive—if inflation proves sticky above 2%, it would raise the odds of another rate hike before year-end. Japanese government bond yields have been drifting higher in response, making it harder for USD/JPY to maintain upward momentum above 148.

Data Calendar Puts Focus on U.S. Labor and Spending

While Japan’s data calendar is thin outside of Tokyo CPI, the U.S. calendar is heavy with potential volatility triggers. Thursday’s revised Q2 GDP, weekly jobless claims, and Friday’s core PCE deflator will be critical. Even if the PCE itself is well-telegraphed from CPI/PPI reports, the accompanying income and consumption numbers carry weight, as they show whether consumer strength is fading. Any sign of weakness would reinforce Fed cut bets and push USD/JPY toward 146 or even 145.

Technical Setup: Range Holds but Pressure Builds

Price action tells its own story. USD/JPY has dipped under 147 ten times in August, with each move quickly reversed. Support at 146.25–146.00 remains firm, reinforced by the 50-day moving average just beneath. On the topside, resistance is found at 148.80 and 150.00, with the 200-day average adding weight around 150.70. RSI and MACD are neutral, suggesting no directional bias until a catalyst emerges. A daily close below 146.00 would open the path to 145.00 and 144.42, while a breakout above 148.80 could test 150.00.

Verdict: Hold USD/JPY with Downside Bias

At ¥147.10, USD/JPY sits at the fulcrum of Fed easing speculation and BoJ normalization risk. The pair looks capped on the upside unless Powell or FOMC members walk back the dovish Jackson Hole message, while downside risks loom if U.S. data confirm economic softness. Traders should treat ¥146.00 as the line in the sand—holding above it supports rangebound positioning, while a break could accelerate a slide to ¥145.00. Given the weight of Fed cut bets and BoJ’s hawkish lean, the risk-reward tilts bearish, making this a Hold with bias to Sell on strength until clarity emerges from U.S. data and Tokyo CPI.

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