The USD/JPY pair is holding near 153.80, and is on track for a seventh straight day of gains ahead of the Federal Reserve decision tomorrow. The pair is closing in on the 154.39 resistance level, with traders keeping a close watch on what lies ahead.
Can USD/JPY Break Higher?
The Fed decision tomorrow is the major driver for markets this week. While no changes in rates are expected, it’s all about the tone. If the Fed leans hawkish and reinforces the message of “higher for longer,” the U.S. dollar is likely to get another boost. That could see USD/JPY push toward the next major resistance at 156.77.
On the flip side, any dovish pivot or hints toward rate cuts in 2024 could cause a pullback. But so far, the data has held up well for the U.S., keeping the dollar supported.
BOJ Looms Large on December 19
After the Fed, the focus shifts quickly to the Bank of Japan (BOJ) on December 19. The BOJ has been under pressure to tweak its yield curve control (YCC) policy, but expectations remain low for a major shift.
The yen has struggled as the BOJ remains the outlier among central banks, keeping ultra-loose policy intact. Still, any surprises could see USD/JPY reverse quickly, so traders will be on guard.
Key Levels to Watch
- Resistance: 154.39, 156.77
- Support: 152.18, 149.30
USD/JPY has momentum on its side for now. The question is whether the Fed tomorrow or BOJ next week will be the trigger for a breakout or reversal. For now, all signs point to a tense, data-driven week ahead.
