- Monetary policy divergences between the Federal Reserve and the Bank of Japan will continue to weigh on the outlook for the Japanese yen
- The U.S. dollar retains a constructive profile for now
- This article looks at USD/JPY key levels to watch in the coming days
The Federal Reserve and the Bank of Japan had their September monetary policy meetings. The Fed maintained a hawkish stance, hinting at more tightening this year and expecting high interest rates for longer. Meanwhile, the BoJ stuck to its loose policy without indicating any immediate changes. This divergence favors the strength of the US dollar and may lead to some yen depreciation, although talk of FX intervention by Japan's government could deter excessive weakness.
From a technical perspective,
However, if there is an unexpected shift in market sentiment favoring sellers and a rejection from current levels, the first support level is seen at 147.30, followed by 145.90. If bearish momentum continues, there is a possibility of a retracement towards 144.55, which is slightly below the 50-day simple moving average.