But a 25 basis point increase may already be priced in. Therefore, USD/JPY could decline more sharply if Ueda talks at the next couple of meetings about another hike or if he indicates that rates might be raised beyond 1.75%. A dovish press conference might have the opposite effect and move USD/JPY higher.

On the other hand, the expectation of a 25 basis point Fed rate hike in September has increased by 87% after the US inflation data. If both central banks raise rates by 25 basis points, the interest rate gap would remain broadly unchanged.

This could limit the immediate gains in yen. The move in USD/JPY would then depend mainly on which central bank signals a faster pace of future tightening.

USD/JPY Forecast: 152 Support in Focus After Break Below 159

USD/JPY remains under extreme pressure in the short term after failing at the long-term resistance zone of 160-162. The pair produced a high of 163.98 on July 20 but failed to hold it and dropped sharply. This drop indicates that the pair is moving toward the 150 area in the short term to find the next support.

This support is defined by the ascending channel pattern that stretches from the January 2023 lows. If this support holds and bottom forms around 150, it will likely initiate another rally toward 160-162.

The formation of bottoms in December 2023, September 2024 and April 2025 suggests positive price action in USD/JPY. Therefore, a confirmed break above the 162 level will likely open the way to higher levels, possibly reaching 175.