USD/JPY remains under pressure as the Japanese yen strengthens ahead of another potentially important Bank of Japan policy decision. The pair has fallen toward the mid-155 region after breaking below key technical levels, while expectations for further Japanese monetary tightening have added to demand for the yen.

The latest USD/JPY forecast is increasingly centered on whether the pair can defend the 152 to 155 support region or extend its correction toward 149. Oversold momentum creates the possibility of a short-term rebound, but the broader outlook has become more complicated as the Bank of Japan moves toward tighter policy, and traders assess the future path of U.S. interest rates.

Bank of Japan Tightening Strengthens the Yen

Monetary policy remains the primary catalyst behind the latest USD/JPY move. The Bank of Japan is expected to raise its policy rate by 25 basis points to 1.25%, extending a tightening cycle that has gradually reduced the extreme interest-rate differential between Japan and other major economies.

Danske Bank analysts expect the rate increase to be accompanied by a more flexible approach toward future tightening. The hike itself has largely been priced into markets, making Governor Kazuo Ueda’s guidance potentially more important than the rate decision. A signal that the BoJ is prepared to raise rates more quickly could provide additional support for the yen.

The Federal Reserve is pulling in the opposite direction. Its latest dot plot indicated that 16 of 18 policymakers expect at least one additional U.S. rate increase this year. Higher U.S. rates would normally support USD/JPY by preserving the yield advantage of dollar-denominated assets, leaving the pair caught between increasingly hawkish monetary policy on both sides.

Inflation is adding another complication. Brent crude has moved back above $100 per barrel, while the UN Food and Agriculture Organization’s global food price index reportedly climbed to its highest level since late 2022 in August. Higher energy and food costs could keep inflation risks elevated in both economies, increasing uncertainty around how aggressively the Fed and BoJ ultimately tighten policy.

USD/JPY Forecast: 152 Emerges as Critical Support

From a technical perspective, USD/JPY maintains a bearish near-term structure. The pair has traded below its 20-day exponential moving average around 156.45, leaving that level as the first significant barrier for any recovery.

USD/JPY Price Performance. Source: TradingView

The larger chart points toward an even more important test. Following the breakdown below the April 2025 to July 2026 uptrend, USD/JPY moved through the 38.2% Fibonacci retracement near 154.80. The next major area sits around 152, close to the 50% retracement and the lower boundary of the previous parallel channel.

Momentum indicators suggest selling pressure may be becoming stretched. Daily RSI has recently approached oversold conditions last seen in 2024, while a bullish divergence has begun to emerge. That does not confirm a bottom, but it raises the probability that another move lower could eventually encounter stronger buying interest.

If 152 breaks decisively, the next major downside level is around 149. This area coincides with the lower portion of the broader channel that has guided USD/JPY since 2023 and could become a significant technical battleground if yen strength continues.

On the upside, 154.80 is the first level bulls would need to reclaim before challenging the 20-day EMA around 156.45. Sustained strength beyond those levels could bring the 158.40 to 161 region back into view.

Intervention Adds Another Variable for USD/JPY

Currency intervention has also become an important factor in the yen’s recent volatility. Japanese authorities have previously stepped into foreign exchange markets during periods of extreme yen weakness, and coordinated action involving U.S. authorities has added another source of uncertainty for traders holding large short-yen positions.

The longer-term effectiveness of intervention remains less clear. Previous episodes produced sharp yen rallies before USD/JPY eventually recovered, suggesting direct currency purchases can influence short-term positioning without necessarily overriding monetary-policy fundamentals.

This time, however, the interest-rate backdrop is evolving alongside intervention risks. Continued BoJ tightening would gradually reduce the rate differential that has supported yen-funded carry trades, potentially making intervention more effective if speculative pressure against the currency becomes excessive.

Oil represents an additional risk for Japan because the country remains heavily dependent on imported energy. Persistently elevated crude prices could raise domestic inflation while simultaneously increasing import costs, leaving the BoJ with a difficult balance between inflation control and economic growth.

Oversold RSI Raises the Risk of a USD/JPY Rebound

Although the short-term trend remains bearish, technical momentum is becoming increasingly important for the USD/JPY forecast. RSI readings have moved into or near historically oversold territory across recent analyses, suggesting much of the immediate selling pressure may already have been absorbed.

The pair has also fallen considerably from recent highs, making the 152 to 155 region particularly important. If buyers defend this area and USD/JPY subsequently reclaims 154.80 and 156.45, the current decline could begin to resemble a corrective move within a broader long-term structure rather than the beginning of a sustained breakdown.

Confirmation would still require a stronger recovery. The 158.40 to 161 region represents a substantial resistance zone, and a move through it would be needed before the previous highs return to focus.

The bearish scenario remains straightforward. A sustained break below 152 would weaken the existing long-term structure and expose 149. Failure to stabilize there would represent a considerably larger technical deterioration for the pair.

CoinCodex USD/JPY Price Prediction

According to CoinCodex’s USD/JPY price prediction, the dollar-yen exchange rate could experience a brief stabilization before entering a broader decline through the end of 2026 and much of 2027.

USD/JPY Price Prediction

The forecast remains relatively firm during September 2026, with an average projected exchange rate around ¥158 and an upper estimate near ¥159.34. October introduces considerably more volatility, with projections ranging from roughly ¥150 to ¥159 while the monthly average remains around ¥155.

The model turns more bearish toward the end of the year. November’s projected average falls to approximately ¥151.57, followed by ¥148.70 in December. The lowest December projection reaches ¥146.41, which would place USD/JPY substantially below the 152 support area currently attracting technical attention.

That downward trajectory extends into 2027. CoinCodex projects an average near ¥149.32 in January before USD/JPY moves into the mid-¥140s during February. March through May represents another period of weakness, with average projections falling toward ¥143 and monthly lows approaching ¥141.

There is a modest recovery projected for June and July, when average rates return toward ¥145 to ¥147. The rebound is not expected to develop into a sustained reversal, however. Forecasts weaken again during August before September 2027 produces the lowest average in the supplied outlook at approximately ¥139.86, with a potential low near ¥138.

The CoinCodex trajectory therefore points toward a substantially stronger yen over the next 12 months. While the model allows for temporary USD/JPY rebounds, particularly during late 2026 and the middle of 2027, its broader direction remains lower, with the pair potentially moving from the mid-150s toward the low-140s and eventually testing the high-130s.

U.S. Dollar Index gains ground as traders react to Chicago Fed National Activity Index report. The report indicated that Chicago Fed National Activity declined from 0.08 in July to -0.04 in August, compared to analyst forecast of +0.2.

U.S. Dollar index is moving towards the resistance level at 100.50 – 100.65. In case U.S. Dollar Index manages to settle above the 100.65 level, it will head towards the next resistance, which is located in the 101.50 – 101.65 range. RSI is in the moderate territory, so there is enough room to gain momentum in case the right catalysts emerge.

Created on September 21, 2026

The British pound spiked against the Japanese yen after the Bank of Japan raised rates, mainly because the press conference was not overly hawkish. There were no massive threats of major interest rate hikes. A 50-basis-point rate hike in the short term has been taken off the table, which was something people had been looking for. So, the Japanese yen has lost a bit of its luster.

The market had recently turned around and gone bullish after crossing below the oversold condition in the stochastic oscillator. It now looks like piercing the ¥210 level is a good sign. We did not manage to blow through there, and we have given back quite a bit of the gains, but that makes sense. It was a massive knee-jerk reaction. These things quite often will have a little bit of a pushback.

But the interest rate differential has actually shrunk between these two currencies

It is still pretty wide because the Bank of England, of course, failed to raise rates on Thursday. Over the longer term, you still get paid to hold this pair, and we will have to wait and see exactly how the Japanese yen is treated around the world.

Keep in mind that Japan has a major issue when it comes to energy as well. So, it will be interesting to see how the yen behaves in that environment as the supply of crude oil becomes increasingly threatened. The Ukrainians have attacked a Russian refinery, and the Saudis are now saying that perhaps some of their contracts to Europe and Asia may have to be put on hold due to a lack of ability to fulfill those contracts. Things could get very interesting here.

Begin trading our daily forecasts and analysis. Here is a list of Forex brokers in Japan to work with.

Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire

EURJPY price attempted to record some additional gains during Friday’s trading, touching 181.55. However, its subsequent reversal below the resistance at 180.80 confirms its adherence to the previously suggested bearish scenario, with the price currently stabilizing near 180.15.

The price may now be forced into some sideways trading until it gathers the additional bearish momentum required to activate the downside attack. We expect it to reach 179.45 soon, followed by 178.60.

The expected trading range for today is between 179.45 and 180.80

Trend forecast: Bearish

EURGBP price ended its bullish corrective rebound after facing the resistance extending toward 0.8605, stabilizing below it and maintaining its position within the boundaries of the bearish channel shown on the accompanying chart, as it currently slips toward 0.8577.

We note that the 55-period moving average positioned above the current trading levels will increase the chances of the price gathering additional bearish momentum. This leads us to expect the formation of new bearish waves, through which the price may attempt to reach 0.8540 before renewing pressure on the obstacle at 0.8525, seeking an opportunity to resume the bearish attack in the upcoming sessions.

The expected trading range for today is between 0.8540 and 0.8585

Trend forecast: Bearish

Key Points

• GBP/USD has declined nearly 2.5% from its August high after breaking below the September opening range.
• Sterling is approaching a key support area after failing to hold above recent resistance levels.
• The pair remains below the short-term moving average, showing continued selling pressure.
• Upcoming UK and US PMI data could influence the next move as traders reassess economic momentum.

Market Move

GBP/USD is trading around 1.3358 after recovering slightly from recent losses.

The pair has struggled to maintain momentum above the 1.3360–1.3365 region, where previous rebounds have faced resistance.

A recovery above key resistance levels would be needed to improve the short-term outlook.

Why Traders Are Watching

With the Federal Reserve and Bank of England policy meetings now concluded, traders are shifting focus towards incoming economic data for clues on growth performance and future market direction.

The upcoming UK and US Flash Purchasing Managers Index (PMI) releases will provide signals on business and economic activity, which could influence expectations for future monetary policy decisions.

Stronger UK data may offer support for sterling, while renewed strength in US economic indicators could favour the dollar.

Key Trading Levels

GBP/USD is currently testing the 1.3345 support zone, which acts as the immediate decision point for the next move. A successful defence of this level could allow buyers to target 1.3410 and 1.3474.

However, a break below support may confirm renewed selling pressure and expose the pair to 1.3255 and 1.3194.

Bullish and Bearish Setups

For a bullish scenario, GBP/USD could attempt a recovery if buyers defend the 1.3345 support zone and push price back above 1.3365. Momentum indicators would need to confirm improving buying pressure for the rebound to extend.

For a bearish scenario, a break below 1.3345 could signal that sellers remain in control, increasing the risk of a move towards 1.3255. Further weakness below this level may extend the broader September correction.

Disclaimer

The price levels and market scenarios above reflect the author’s assessment at the time of writing. They do not represent financial advice or an official recommendation from VT Markets. Traders should conduct their own analysis and manage risk carefully.

GBP/USD remains at a critical point after its recent decline, with the next direction likely dependent on whether buyers can defend current support levels.

Flash Manufacturing and Services PMI figures are due from both the UK and U.S. on the 23rd, offering crucial clues on economic performance on both the pound and dollar.

If the UK’s PMI report is weak, it suggests a slowing economy, which can lead to a decline in the pound against the US dollar. Conversely, a strong PMI reading indicates a sturdy economy, which could strengthen the pound.

The US PMI data influences the dollar similarly, affecting the GBP/USD exchange rate.

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A near-1% weekly fall leaves the Euro exposed to further Dollar gains, although both banks see ECB tightening limiting the decline.

The Euro to US Dollar exchange rate (EUR/USD) finished Friday near 1.1486, almost 1% lower over the week, with ING warning of a possible test of 1.1400.

Crédit Agricole’s December forecast is lower at 1.13, extending to March 2027 before a gradual recovery later that year.

Wednesday’s Fed-driven fall below 1.15 accounted for much of the weekly decline.

The Federal Reserve raised rates by 25 basis points to 3.75%-4.00%, while its 4.1% median projection for end-2026 implies another quarter-point increase.

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ECB tightening could slow the Euro’s decline

ING sees scope for higher short-term US yields to support the Dollar, particularly if incoming data and energy prices encourage markets to price an October hike.

However, it also highlights hawkish ECB commentary as a reason for caution:

“This is one reason not to chase EUR/USD lower too aggressively from current levels.”

Its 1.1400 view is a near-term downside risk, with Friday’s assessment also allowing for stabilisation.

Crédit Agricole shares that qualified bearish stance:

“We are moderately bearish on EUR/USD from current levels because we expect additional ECB tightening to limit the downside risks to a degree in the coming months.”

The bank argues that expensive energy, weaker international competitiveness and renewed sovereign credit concerns weigh on European assets, even with the economy proving resilient.

It forecasts 1.14 in June 2027, 1.16 in September and 1.17 in December, following its December 2026 and March 2027 forecasts of 1.13.

The immediate test is whether cheaper oil can loosen the Dollar’s grip before those longer-term recovery forecasts come into view.

ING noted on Friday that cheaper oil had slowed the Dollar’s post-Fed advance, but doubted that prospective talks between President Trump and Gulf leaders would deliver sufficient relief:

“Even so, we do not see these developments as enough to take Brent back below $100/bbl at this stage.”

Our currency coverage draws on live market data, official economic releases and published bank research.

The Japanese Yen weakened despite Japan’s rate hike, but Rabobank’s three-month forecast rests on stronger wages and a lasting return of domestic inflation.

Rabobank’s three-month FX forecast puts the US Dollar to Yen exchange rate (USD/JPY) at 154.00, below Friday’s close near 156.88 after a week of solid US Dollar gains.

The forecast was set before Friday’s Bank of Japan decision, when the bank warned that an expected hike might fail to satisfy Yen buyers.

“While profit-taking on fresh long JPY positions cannot be ruled out following the BoJ meeting tomorrow, we are optimistic that the economic reforms in Japan can help sustain USD/JPY around current levels in the coming months. Our 3-month USD/JPY forecast is 154.00.”

The subsequent move has made that target more demanding: the pair rose 0.46% on Friday and 2.19% over the week, leaving 154 around 1.8% below its close.

Japan’s central bank voted 7-2 to raise its policy rate to 1.25%, effective from 24 September.

Governor Kazuo Ueda nevertheless said: “We don’t assume a specific pace for further interest rate hikes.”

That caution matched the vulnerability Rabobank had identified, while the Federal Reserve’s rate increase added a competing source of support for the Dollar.

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Wages underpin Rabobank’s case for the Yen

Rabobank argues that Japan’s recovery has become strong enough to support tightening without requiring an immediate acceleration in rate rises.

“Greater evidence of domestically generated inflation stemming from real wage data, a resilient economy aided by corporate Japan’s involvement in the semi-conductor supply chain and stock market reforms are all JPY supportive factors.”

The bank highlighted July’s 2.4% annual increase in real cash earnings as evidence that stronger pay is supporting Japan’s escape from decades of weak inflation.

For the 154 forecast to work, that domestic improvement must translate into renewed demand for the Yen despite higher US rates.

Friday’s reaction illustrates the risk: delivering a widely expected hike offers limited currency support when investors want reassurance about the next one.

Our currency coverage draws on live market data, official economic releases and published bank research.

Therefore, the rise in nominal yields reflects high real returns and persistent inflation concerns. These yields attract capital to the United States. They also raise borrowing costs elsewhere and reduce the appeal of expensive equity valuations.

ECB and BoE Rate Outlook: Inflation Delays Policy Easing

Other central banks of the developed nations also face inflation pressure. The ECB raised the deposit rate to 2.50% and the refinancing rate to 2.65%. It expects inflation of 3.0% in 2026 but growth of only 0.9%. The BoE took a different approach. It held the interest rate at 3.75% by 6-3 vote. The three dissenters wanted an increase to 4.00%.

UK inflation was 3.1% in August and the bank warned that another energy shock could push the inflation above 4% in early 2027. These figures explain why both banks are cautious despite the weaker growth.

BoJ Hikes Rates as China Holds Policy Steady

Asia presents more divided picture. The Bank of Japan raised the overnight rate to 1.25% on September 18 as energy prices, wages and yen weakness increased the risk of inflation. Australia has held the rate at 4.35% after several increases in 2026.

China has kept the one-year loan prime rate at 3.00% while consumer inflation was only 0.8% in August. This is selective global tightening phase rather than synchronized hiking cycle. A stronger dollar will limit how quickly many countries can cut rates because weaker currencies raise the costs of imports and energy.

– Written by


Frank Davies

STORY LINK Pound-to-Dollar Forecast: Fed Rate Hike Pushes GBP/USD to 7-Week Lows

The Pound to Dollar exchange rate (GBP/USD) fell to seven-week lows around 1.3365 after contrasting Federal Reserve and Bank of England decisions strengthened the Dollar’s interest-rate advantage.

The Fed raised rates and signalled that further tightening remains likely, while the BoE held at 3.75%, leaving Sterling under pressure despite stronger-than-expected UK retail sales.

GBP/USD Forecasts: Near Seven-Week Lows

The Pound to Dollar (GBP/USD) exchange rate remained under pressure at the end of the week after contrasting policy signals from the Federal Reserve and Bank of England.

GBP/USD slumped to seven-week lows around 1.3365 before recovering modestly towards 1.3370 on Friday.

The Federal Reserve raised interest rates and signalled that further tightening is likely, while the Bank of England held rates at 3.75% despite growing inflation risks.

The contrasting policy stance helped strengthen the Dollar and left Sterling struggling to recover.

UoB commented; “We will maintain our negative view as long as GBP holds below the ‘strong resistance’ at 1.3460.”

Scotiabank noted immediate support around 1.3350 and added; “We see additional support in the 1.3300/1.3320 area.”

Fed Signals Further Tightening

The Federal Reserve increased benchmark interest rates by 25 basis points to 3.75%-4.00% on Wednesday, in line with market expectations.

The decision was unanimous, while the updated dot plot showed that 16 of 18 policymakers expect at least one further rate increase before the end of 2026.

Fed Chair Kevin Warsh also struck a broadly hawkish tone, stressing that the economy remains close to full employment and allowing policymakers to focus more heavily on persistent inflation pressures.

He avoided explicit forward guidance, but the updated projections reinforced expectations that further tightening remains likely.

ING is less convinced that the Fed will deliver a sustained series of hikes; “Ordinarily the assumption is that if the Fed hikes, they don’t move just once, and indeed their forecast table does have a further hike pencilled in. However, this time around we think it may end up being a one-off.”

The bank added; “We think risks are more balanced for USD now that the monetary policy boost has been absorbed, but they remain tilted to the upside in the near term.”

ING expects markets to continue pricing the possibility of another hike, with high oil prices and reduced concerns over Dollar debasement providing additional support.

MUFG also expects one further Fed hike, but sees limits to Dollar upside; “The US dollar gains ahead should also be curtailed by the fact that other central banks are set to turn more active in hiking rates as well.”

Near-Term Outlook: BoE Holds despite Inflation Risks

The Bank of England kept rates unchanged at 3.75% on Thursday, in line with expectations.

The Monetary Policy Committee again voted 6-3 to hold, with Catherine Mann, Megan Greene and Huw Pill supporting an immediate increase to 4.0%.

Governor Andrew Bailey warned that rates could still need to rise if elevated energy prices persist and evidence emerges of stronger second-round inflation effects.

The Bank also said inflation could rise above 4% early next year if energy pressures remain intense.

Markets continue to see a meaningful chance of a November hike, but expectations for a more aggressive tightening cycle eased following the meeting.

Friday’s stronger UK retail sales provided Sterling with some support, with volumes rising 0.5% in August compared with expectations for a 0.2% decline.

The data reinforced signs that the UK economy remains relatively resilient and increased pressure on the BoE to retain a tightening bias.

Markets now price roughly a 65% chance of a November rate increase.

For GBP/USD, the 1.3350 area remains the immediate support level.

A sustained break below this region would expose 1.3300-1.3320, while Sterling would need to recover above 1.3460 to materially improve the short-term technical outlook.

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