Rate Decision Looms: USD/JPY Holds Firm Above 158

Summary:

Ahead of its September 17–18 policy meeting, the Bank of Japan has arranged for Board members to deliver a series of public remarks, providing the market with further clues as to whether the central bank will raise interest rates in September.

BUY USDJPY

EXP

TRADING

158.385

Entry Price

165.000

154.000

158.949 +1.174 +0.74%

0.0

Pips

Flat

154.000

Exit Price

158.385

Entry Price

165.000

Fundamentals

Japan and the United States have previously taken joint action to intervene in the foreign exchange market to prop up the yen, and Bessent has recently made public statements on multiple occasions expressing his hope that the Bank of Japan will raise interest rates as soon as possible, further reinforcing market expectations that the Bank of Japan will raise rates in September. Mari Iwashita, Executive Interest Rate Strategist at Nomura Securities, stated that with domestic producer prices in Japan rising sharply and expected to continue their upward trend, the likelihood of a rate hike in September is high; if a hike occurs in September, the probability of another hike in December will also increase. Since ending its decade-long program of massive monetary stimulus in 2024, the Bank of Japan has been gradually normalizing its monetary policy and has raised interest rates on multiple occasions. In June of this year, it raised the policy rate to 1%, the highest level in 31 years.

The U.S. job market showed clear signs of weakness in July, prompting financial markets to scale back their previously strong expectations for a Fed rate hike in September. Nonfarm payrolls fell by 23,000 in July, while the unemployment rate edged down slightly from 4.2% in June to 4.1%, primarily due to some workers leaving the labor force. The deterioration in hiring conditions suggests that the U.S. job market, which had previously appeared relatively stable, may be more fragile than expected. This means that as the Federal Reserve considers raising interest rates to curb inflation, it will need to more carefully weigh the impact of further policy tightening on the job market.

Technical Analysis

On the daily chart, the USD/JPY pair shows Bollinger Bands widening downward, with moving averages diverging downward, indicating that the downtrend remains intact. However, the candlestick pattern formed a “golden needle bottom,” suggesting the possibility of a rebound cannot be ruled out. The RSI stands at 36, indicating that market participants are predominantly selling. On the 4-hour chart, the Bollinger Bands are narrowing, moving averages are flattening, and the MACD fast and slow lines have formed a golden cross below the 0-axis and are retracing toward it—though they remain some distance away, suggesting the rebound is not yet complete. With the RSI at 52, the market has entered a wait-and-see zone and is likely to rebound toward the 50 EMA. Strategically, look to go long on dips.

Rate Decision Looms: USD/JPY Holds Firm Above 158_1

Rate Decision Looms: USD/JPY Holds Firm Above 158_2

Trading Recommendation

Trading Direction: Long

Entry Price: 158.2

Target Price: 165

Stop-Loss Price: 154

Support Levels: 156, 155, 153

Resistance Levels: 160, 162, 165

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Rate Decision Looms: USD/JPY Holds Firm Above 158

Risk Disclosure