The yen has gained more than 3% in September after Japan spent a record ¥15.4T defending it from a 163.98 low | That's TradingNEWS
Key Points
- USD/JPY rose 0.48% to 155.09, bouncing from the seven-month yen high of 153.40 on September 10.
- The BOJ is expected to hike to 1.25% on Friday, its highest policy rate in roughly 31 years.
- Japan spent a record ¥15.4 trillion buying yen between July 30 and August 26.
USD/JPY climbed to 155.09 on Tuesday afternoon, up 74 pips or 0.48% on the session, extending a rebound from the seven-month yen high of 153.40 printed last Thursday. The pair traded at 155.17 early in the U.S. morning, up 0.54%, and has gained 0.79% over seven days. The dollar's recovery came as the 10-year Treasury yield topped 5% and the dollar index climbed to 99.64, up 0.25%.
The price sits in a narrow corridor with hard walls on both sides. Above, the Japanese Ministry of Finance has shown exactly where its tolerance ends. The yen hit a 40-year low of 163.98 per dollar before Japan and the United States intervened jointly on July 31. Japan spent a record ¥15.4 trillion, or $98 billion, buying yen between July 30 and August 26, and the U.S. confirmed it used its own foreign-currency reserves in a coordinated operation. No major currency pair has a clearer official ceiling.
Below, the Bank of Japan is preparing to tighten. The central bank decides on Friday, September 18, and is widely expected to lift its policy rate by 25 basis points to 1.25%, the highest level in roughly 31 years, following a hike in June. Japanese producer prices rose 7.6% year over year in August, and large manufacturers' sentiment in the third quarter reached its strongest level since the fourth quarter of 2021. A BOJ that moves faster than its recent cadence of two hikes a year would pull USD/JPY lower.
In between sits the Federal Reserve. Fed funds futures price an 86.3% chance of a quarter-point hike to 3.75% to 4.00% on Wednesday, the first increase since 2023. That hike would widen the policy gap with Japan to 275 basis points even after a BOJ move to 1.25%. The U.S. 10-year yield at 5.005% sits 196 basis points above Japan's 10-year yield of 3.042%.
The yen has still gained more than 3% against the dollar in September, driven by BOJ hike expectations, the unwinding of carry trades and increased repatriation of capital by Japanese investors. The pair traded above 160 at the end of August. At 155.09, it sits 491 pips lower.
The thesis of this forecast is that USD/JPY is caught in a squeeze between a hawkish Fed that supports the dollar and a hawkish BOJ backed by an intervention-ready Finance Ministry that caps it. The 153.40 low defines the downside, the 158.67 to 160.00 zone defines the ceiling, and Friday's BOJ decision decides which side breaks first.
From 163.98 to 153.40: The Intervention Cycle That Built the Current Range
The current setup is the product of the largest yen intervention in 15 years and two failed attempts by the dollar to reclaim its highs.
The first leg began in July. The yen weakened through the spring and summer as the gap between Japanese and U.S. borrowing costs pulled capital into higher-yielding dollar assets. By late July, USD/JPY hit 163.98, a 40-year low for the yen. On July 31, Japan and the United States acted jointly. The pair collapsed toward 155.21, and on August 3 the yen strengthened into the lower 155 range as markets stayed wary of further action.
The relief did not last. By August 12, the pair was back above 159. Carry trades reasserted themselves because Japanese borrowing costs remained far below returns overseas. Higher Treasury yields and elevated oil prices, a particular problem for energy-importing Japan, restored the macro forces favoring the dollar. On August 27, USD/JPY traded near 159.20, with money markets pricing an 87% chance of a September BOJ hike. It pushed above 160 into the end of August.
The second leg lower began in September. On Wednesday, September 2, BOJ board member Hajime Takata argued in Sapporo that the central bank should raise rates nimbly to counter intensifying inflation rather than hold to the semiannual pace markets had assumed. He called 2026 a turning point requiring flexibility on both pace and magnitude. Takata was the sole dissenter in July, voting for a hike to 1.25% when the board held at 1.00%. The yen gained 0.94% that day to 158.67.
Thursday, September 3 delivered the big move. The yen jumped more than 2%, briefly reaching 155.28, its strongest level in a month. The pair touched 156.15 earlier in the session and settled at 155.47 in New York, the strongest yen level since August 3. The move revived speculation about fresh intervention, but traders tied it to rising BOJ hike bets rather than official action. By September 4, USD/JPY traded at 155.25, and September hike odds had eased to 75%.
The yen kept strengthening. By Thursday, September 10, it traded at 153.40, near its strongest level in seven months. Friday reversed part of that gain: the yen weakened past 154 after U.S. producer inflation accelerated in August. On Monday, it eased toward 154 but held near its highest levels since February. Tuesday's move to 155.09 extends the dollar's bounce.
The Bank of Japan on Friday: A Hike to 1.25% and the Question of Pace
The Bank of Japan's September 17 to 18 meeting is the single most important event for USD/JPY this month.
The base case is a 25-basis-point hike that lifts the policy rate to 1.25%, the highest level in roughly 31 years. It would follow the June increase and a July hold at 1.00%. Money markets priced 87% odds of a September move on August 27 and 75% odds on September 4, and the hike has since become widely expected as the data strengthened.
The data supports action. Japanese producer inflation climbed 7.6% in August, a reading that reflects the pass-through of energy costs from the Middle East war into the country's import-dependent economy. Sentiment among large manufacturers in the third quarter reached its strongest level since the fourth quarter of 2021, supported by robust government measures. Takata's argument for nimble tightening now has hard numbers behind it.
The central bank itself is signaling readiness to move faster. The BOJ is reported to be prepared to act as soon as this week's meeting and to be weighing a faster sequence of increases thereafter, rather than its recent pace of roughly two hikes a year. Some traders have discussed a larger increment than 25 basis points, though that is not the base case. An October follow-up hike is seen as possible but unlikely.
The pressure from Washington is explicit. Treasury Secretary Scott Bessent has repeatedly urged the BOJ to pursue more aggressive policy tightening to prevent excessive yen weakness. He said he believed the Japanese government and the BOJ would take action that would lead to a stronger yen, and he privately urged officials to communicate the path of interest rates.
The forex impact depends on guidance, not the hike. A 25-basis-point move to 1.25% is priced. What is not priced is a clear commitment to a faster sequence. Three outcomes are possible.
A hike paired with guidance for additional increases before year-end would be the hawkish surprise. It would accelerate carry trade unwinding and push USD/JPY back through 154.00 toward the 153.40 low.
A hike paired with data-dependent language matching the current cadence would be the base case. The pair would likely hold between 153.40 and 156.15.
A hold, or a hike framed as the last move for some time, would be the dovish surprise. With the Fed hiking on Wednesday, that combination would send USD/JPY back toward 158.67 and would likely force the Finance Ministry to consider fresh intervention.
The decision lands early Friday in Asian hours, after the Fed on Wednesday. That sequencing means the Fed moves the pair first and the BOJ gets the final word for the week.
The Fed on Wednesday: 275 Basis Points of Policy Gap After Both Hikes
The Federal Reserve's decision on Wednesday sets the dollar leg of USD/JPY, and it lands two days before the Bank of Japan.
The FOMC opened its two-day meeting on Tuesday. Fed funds futures price an 86.3% probability of a quarter-point hike to 3.75% to 4.00% from 3.50% to 3.75%. August CPI rose 0.4% month over month and 3.4% year over year, with a key underlying inflation gauge rising at its fastest pace in four months. August PPI accelerated, a print that pushed the yen back past 154 last Friday. August payrolls rose by 162,000.
The policy-rate gap explains why carry trades keep returning. Today, the top of the Fed range at 3.75% sits 275 basis points above the BOJ's 1.00%. After a Fed hike on Wednesday and a BOJ hike on Friday, the gap would still be 275 basis points: 4.00% against 1.25%. Both central banks tightening by the same amount leaves the interest rate advantage unchanged.
That is the core problem for yen bulls. As long as the cost of money in Japan stays far below returns overseas, carry trades will reassert themselves. An investor borrowing yen at 1.25% and buying Treasury bills or dollar deposits paying close to 4% collects a spread of roughly 275 basis points a year. Intervention can scare those investors, as it did on July 31, but it cannot change the math.
Forward pricing tilts the balance. Futures price two quarter-point Fed hikes by December, which would lift the U.S. upper bound to 4.25%. If the BOJ matches with a hike in October or December, the gap stays at 275 basis points. If the BOJ moves faster than the Fed, the gap narrows for the first time in this cycle.
The dot plot is the key risk. The June projections pointed to a federal funds rate of 3.8% by the end of 2026, implying one hike. A median showing three hikes this year would widen the expected gap and push USD/JPY toward 156.15. A median showing one hike would narrow it and support a move back toward 154.00.
Chair Kevin Warsh's framing matters for both sides. At Jackson Hole on August 28, Warsh argued that softer summer inflation readings did not prove underlying trends had improved. A press conference emphasizing energy-driven inflation risks would reinforce the dollar's rate advantage into Friday's BOJ decision.
The statement lands at 2:00 p.m. ET Wednesday, and Warsh's press conference begins at 2:30 p.m. ET.
Treasury Yields at 5.005% Against JGBs at 3.042%: The 196 Basis Point Spread
The bond market is the transmission mechanism between central bank policy and the currency, and both sides of the spread are moving higher.
The U.S. 10-year Treasury yield hit 5.041% on Tuesday, its highest level since 2007, before settling at 5.005% in the afternoon. The yield sat at 4.7% on August 24. The 30-year Treasury yield stood at 5.36% as of September 11. A global bond selloff driven by rising public and corporate borrowing and energy-driven inflation has pushed long-end yields higher across the developed world.
Japanese yields are climbing too. Japan's 10-year government bond yield traded at 3.042% on Tuesday, up 4.9 basis points on the day. That level would have been unimaginable just a few years ago, when the BOJ held yields near zero through yield curve control. The rise reflects both expectations for further BOJ tightening and the global rise in term premiums.
The spread is what matters for the currency. With the U.S. 10-year at 5.005% and Japan's 10-year at 3.042%, the gap stands at 196 basis points. That gap is large enough to keep Japanese institutional investors, including life insurers and pension funds, invested in U.S. Treasuries rather than bringing money home.
The trend in the spread is the signal to watch. When Japanese yields rise faster than U.S. yields, the spread narrows, and Japanese investors have more reason to repatriate capital. That dynamic has been part of the yen's September strength: increased asset repatriation by domestic investors has joined carry trade unwinding and BOJ hike expectations as drivers.
On Tuesday, the U.S. 10-year rose 1.7 basis points while Japan's rose 4.9 basis points. The spread narrowed by 3.2 basis points, yet USD/JPY rose 74 pips. That divergence shows the dollar's broad strength and the Fed hike are outweighing the yield spread on a single-day basis.
For the forecast, a sustained narrowing of the 10-year spread below 190 basis points would add fuel to yen strength after the BOJ hike. A widening above 200 basis points, driven by a hawkish Fed dot plot, would support a return toward 156.15. The long end of the Japanese curve is also sensitive to fiscal credibility: a selloff in long-dated JGBs driven by fiscal concern rather than BOJ tightening would weaken the yen rather than strengthen it.
The Ministry of Finance: ¥15.4 Trillion Spent and the 160 Line
The intervention track record is the most important factor capping USD/JPY upside.
Japan spent a record ¥15.4 trillion, or $98 billion, buying yen between July 30 and August 26, according to the Ministry of Finance. The operation began when USD/JPY hit 163.98, the weakest yen level in 40 years. The U.S. separately confirmed it participated in a coordinated effort in late July, using its foreign-currency holdings to buy yen. Washington has not disclosed the size of its purchases.
The joint action was historic. It was the biggest yen intervention in 15 years and the first coordinated U.S.-Japan yen-buying operation in the modern era. American participation signals that Washington views excessive yen weakness as a problem for its own economy and trade relationships, not just Japan's.
The effectiveness has been mixed. The initial intervention drove the pair from 163.98 to 155.21 within days, a move of 877 pips. But the yen gave most of that back within four weeks, and USD/JPY climbed back above 160 by the end of August. Intervention scared markets but did not overcome the interest rate differential.
That history defines the ceiling. Traders now treat the 160 level as the zone where renewed intervention risk becomes acute. The Finance Ministry acted at 163.98, and the market has learned that officials are willing to spend tens of billions of dollars to defend the currency. Any move toward 160 invites verbal warnings, and any rapid move through it invites action.
The strategy has shifted since August. Rather than relying solely on direct intervention, Japanese officials and U.S. counterparts are pressing the BOJ to tighten policy, which attacks the root cause of yen weakness: the rate gap. Bessent's public comments that the government and BOJ would take action leading to a stronger yen reflect that coordinated approach.
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Reserve capacity is not unlimited. Japan holds one of the world's largest foreign-exchange reserve stockpiles, but a second $98 billion operation would draw scrutiny. That constraint makes officials more likely to lean on the BOJ and verbal guidance before spending reserves again.
For the forecast, the Finance Ministry sets an asymmetric risk profile. Upside in USD/JPY is limited to the 158.67 to 160.00 zone before intervention risk rises sharply. Downside has no official floor; it depends only on BOJ policy, carry trade flows and U.S. data. Traders long USD/JPY face the risk of sudden 800-plus-pip moves when officials act. Traders short face only market forces.
Carry Trade Unwinding and Japanese Repatriation: The Yen's September Tailwinds
Beyond central bank policy, two capital flow dynamics have driven the yen's 3% September gain.
The first is carry trade unwinding. For years, global investors borrowed yen at near-zero rates to fund positions in higher-yielding assets abroad, from U.S. Treasuries to emerging market bonds and technology stocks. When BOJ hike expectations rise and the yen strengthens, those positions lose money on the currency leg, forcing traders to buy back yen to close them. That buying creates a self-reinforcing rally.
The September 3 move showed that dynamic at work. The yen jumped more than 2% in a single session as BOJ hike bets rose after Takata's comments. Moves of that size in a major currency pair typically involve forced position covering rather than new directional bets. The yen's strength persisted into the following week, reaching 153.40 on September 10.
Carry trade exposure also connects the yen to global risk sentiment. When equity markets sell off, leveraged investors cut positions and repay yen borrowing. The S&P 500 fell 0.42% on Tuesday afternoon, the Dow dropped 0.79% and the Nasdaq has faced pressure from AI spending concerns after a 5.9% plunge in semiconductor stocks on Monday. A sustained risk-off move would add yen buying pressure.
The second dynamic is repatriation. Japanese institutional investors hold trillions of dollars of foreign assets. As Japanese yields rise, with the 10-year JGB now at 3.042%, the domestic return improves and the incentive to keep money abroad weakens. Increased asset repatriation by domestic investors has been one of the pillars of yen strength this month. Life insurers and pension funds adjust allocations slowly, but even marginal shifts translate into large currency flows given the size of their portfolios.
The risk to both dynamics is the Fed. A hawkish dot plot on Wednesday would lift U.S. yields and widen the rate differential, making carry trades attractive again and slowing repatriation. Tuesday's 74-pip rebound in USD/JPY partly reflects short-yen positions being rebuilt ahead of the Fed.
For the forecast, the carry trade is the swing factor. If Friday's BOJ decision signals a faster tightening path, the unwinding resumes and USD/JPY targets 153.40 and below. If the BOJ disappoints, carry trades return quickly and the pair heads toward 158.67.
Oil at $106 and Japan's Energy Import Bill
Crude oil is a direct headwind for the yen, and this week's surge adds pressure.
WTI crude climbed 4.60% to $106.06 a barrel on Tuesday afternoon, its highest level in four months, and has gained 25.51% over the past month. Brent reached $108.89. Saudi Arabia informed European refiners that their September crude cargoes were being canceled because its East-West pipeline, the main bypass around the closed Strait of Hormuz, remains shut after a September 11 drone attack. The outage puts 4 million barrels a day, 4% of global supply, at risk.
Japan is one of the world's largest energy importers and relies heavily on Middle Eastern crude. Most of its oil imports pass through the Strait of Hormuz. When oil prices surge, Japan pays more dollars for the same volume of imports, which widens its trade deficit and increases the amount of yen that must be sold to buy dollars. That structural flow weighs on the yen regardless of monetary policy.
The yen's weakness on Friday showed the oil connection. The currency faced pressure from surging oil prices that kept inflation risks elevated, with the U.S. and Iran showing no signs of backing down from the war. Elevated oil prices were a key factor in the yen's slide back toward 160 in August, restoring macro forces favoring the dollar after the July intervention.
Oil also feeds Japanese inflation, which creates a paradox for the currency. The 7.6% rise in Japanese producer prices in August reflects imported energy costs. Higher inflation pushes the BOJ toward tightening, which should support the yen. But the same energy shock that forces the BOJ to hike also drains Japan's trade balance, which weakens the yen. The net effect depends on which force dominates in the short run.
The United States sits on the opposite side of that equation. As a net energy exporter, the U.S. benefits from higher oil prices through its trade balance. Rising oil also lifts U.S. inflation, which pushes the Fed toward more hikes and supports the dollar. Both channels favor USD/JPY upside when crude surges.
LNG adds to Japan's burden. Japan is a major LNG importer, and European gas prices at the TTF hub have risen 145.55% year over year as buyers compete for cargoes disrupted by the Hormuz closure. Japanese utilities pay similar global prices for spot cargoes.
For the forecast, oil is a floor under USD/JPY. A Brent move toward $115 would widen Japan's import bill and push the pair toward 156.15 even after a BOJ hike. A Middle East de-escalation sending Brent below $100 would ease the trade deficit and support a yen rally toward 153.40.
The Dollar Index at 99.64: Broad Strength That Lifts USD/JPY
USD/JPY is moving with broad dollar strength this week, not only on yen-specific factors.
The dollar index climbed 0.25% to 99.636 on Tuesday, a nearly two-week high. The dollar rose against every major currency. USD/JPY gained 0.48% to 155.09, EUR/USD fell to 1.1541, GBP/USD slipped 0.17% to 1.3475, AUD/USD dropped 0.15% to 0.7129 and NZD/USD fell 0.36% to 0.5758. USD/CHF rose 0.19% to 0.8190.
The yen is still one of the stronger performers against the dollar over the month. It has gained more than 3% in September through last Friday, while EUR/USD has fallen 0.38% over the past month and GBP/USD has lost 0.52%. That relative strength reflects the BOJ's hawkish turn, which stands in contrast to the ECB's weaker tightening path after its September 10 hike to a 2.50% deposit rate and the Bank of England's expected hold at 3.75% on Thursday.
Three forces are driving the dollar. Higher Treasury yields attract foreign capital. Fed hike expectations widen rate differentials against most major central banks. And Middle East tensions pull defensive money into the world's reserve currency, overpowering the yen's traditional safe-haven role.
That last point marks a change in the yen's behavior. For decades, the yen strengthened during geopolitical crises as Japanese investors repatriated funds and global investors unwound carry trades. In the current crisis, the yen has weakened on oil shocks because Japan's energy import dependence makes it a victim of Middle East disruption rather than a refuge from it. The dollar has taken the haven role.
The Korean won shows the regional pressure. The dollar gained 1.04% against the won on Tuesday to 1,361.92, as Asian energy importers faced the same oil-driven currency weakness. The Chinese yuan held steady at 6.7119 per dollar.
The central bank calendar shapes the week. The Fed decides Wednesday, the Bank of England Thursday and the BOJ Friday. A BOJ hike that strengthens the yen could pull the dollar index lower late in the week, since the yen carries a 13.6% weighting in the index.
For the forecast, dollar index direction sets the tone for USD/JPY between central bank events. A break above 100 on a hawkish Fed would push the pair toward 156.15. A retreat below 99.00 after the BOJ would support a test of 154.00.
Technical Structure: 153.40 Low, 155.21 Pivot, 158.67 and 160.00 Ceilings
The chart reflects a pair that has spent the past six weeks oscillating between intervention-driven lows and carry-driven highs.
The primary support is 153.40, where USD/JPY traded on September 10 near the yen's strongest level in seven months. A daily close below 153.40 would confirm a breakdown of the entire August range and put the pair at levels not seen since February. From 155.09, 153.40 represents a decline of 169 pips, or 1.09%.
The 154.00 level is the first support, where the yen weakened on Friday after U.S. PPI data and where it eased on Monday. A close back below 154.00, 109 pips below current price, would signal the dollar rebound has failed.
The pivot zone sits at 155.21 to 155.47. That band includes the 155.21 low reached after the July 31 intervention, the 155.28 intraday low on September 3 and the 155.47 New York close that day. The pair is trading just below the top of that zone. A daily close above 155.47 would suggest the dollar has absorbed the September yen rally and is rebuilding momentum.
Resistance begins at 156.15, the September 3 session high before the yen's 2% surge. That level sits 106 pips above current price. Above it, 158.67, the September 2 level after Takata's speech, is the next barrier, 358 pips or 2.31% higher. The 159.20 level from August 27 follows, and the 160.00 round number, 491 pips or 3.17% above current price, marks the zone where intervention risk becomes acute. The 163.98 July high is the extreme reference point.
Momentum indicators point to a bearish medium-term structure despite Tuesday's bounce. The daily MACD stands at minus 0.527, a sell signal. The relative strength index sits at 39.0, below neutral but not oversold. The Williams %R reading also signals weakness.
The September pattern shows lower highs and lower lows: above 160 at the end of August, 158.67 on September 2, 156.15 on September 3, then 153.40 on September 10. Tuesday's move to 155.09 is the first meaningful bounce in that sequence. For the downtrend to remain intact, the pair must fail below 156.15. A close above 156.15 would break the lower-highs pattern and open 158.67.
The calendar compresses the setup. Wednesday's Fed decision tests 155.47 and 156.15. Friday's BOJ decision tests 154.00 and 153.40.
Scenario Map: Where USD/JPY Trades After the Fed and the BOJ
The two central bank decisions this week produce three realistic paths for USD/JPY from 155.09.
The first scenario is the base case. The Fed hikes to 3.75% to 4.00% on Wednesday with a dot plot showing two hikes in 2026, and the BOJ hikes to 1.25% on Friday with data-dependent guidance that does not commit to a faster pace. The policy gap stays at 275 basis points. USD/JPY rises toward 155.47 or 156.15 after the Fed, then falls back after the BOJ hike as the yen reclaims some ground. The trading range through Friday is 153.40 to 156.15, with the pair likely ending the week near 154.50 to 155.50.
The second scenario is the yen-bullish outcome. The Fed dot plot shows only one hike this year, and the BOJ hikes to 1.25% while signaling additional increases in the coming months or delivers a larger increment. Carry trade unwinding accelerates, Japanese repatriation picks up and the 10-year spread narrows below 190 basis points. USD/JPY breaks 154.00 and the 153.40 low, targeting 152.00, a decline of 309 pips or 1.99%. A risk-off selloff in equities or a Middle East de-escalation that pulls Brent below $100 would extend the move.
The third scenario is the dollar-bullish outcome. The Fed dot plot shows three hikes or Warsh signals a sustained tightening cycle, and the BOJ holds at 1.00% or hikes while signaling a long pause. The expected policy gap widens, carry trades return and oil keeps pressuring Japan's trade balance. USD/JPY breaks 156.15 and targets 158.67, a gain of 358 pips, then 160.00. At that level, verbal warnings from the Finance Ministry would intensify, and a rapid move through 160 would likely trigger renewed intervention, sending the pair back toward 155 within days.
The probabilities favor the base case with a yen-bullish tilt. The BOJ has signaled readiness to move and board members have argued for nimble tightening. The Fed is priced for two hikes, leaving less room for a hawkish surprise. And the Finance Ministry's ceiling limits how far a dollar-bullish scenario can run.
The asymmetry is structural. Upside toward 160 carries intervention risk that can erase gains in a single session. Downside toward 152 has no official defense. That profile favors selling rallies over buying dips while the BOJ is in a tightening cycle.
USD/JPY Price Forecast Verdict: 156.15 Caps the Rebound, 153.40 Target After the BOJ
USD/JPY at 155.09 is bouncing inside a range defined by policy on both sides. The dollar's 74-pip rebound on Tuesday came from a 10-year Treasury yield above 5%, a dollar index at 99.64, WTI crude at $106.06 and an 86.3% chance of a Fed hike to 3.75% to 4.00% on Wednesday. But the pair remains 889 pips below its July high of 163.98 after Japan spent a record ¥15.4 trillion defending the yen, and the yen has gained more than 3% against the dollar in September.
The Bank of Japan holds the key for the rest of the month. A hike to 1.25% on Friday would lift Japan's policy rate to its highest level in roughly 31 years, backed by 7.6% producer inflation and the strongest large manufacturer sentiment since late 2021. The policy gap with the Fed would stay at 275 basis points after both hikes, which keeps carry trades viable. What moves the pair is whether the BOJ signals a faster tightening path than its recent two-hikes-a-year cadence.
The short-term bias is bearish. The September structure of lower highs from 160 to 158.67 to 156.15 to 153.40 remains intact, and the daily MACD at minus 0.527 confirms negative momentum. Tuesday's rebound is likely to stall below 156.15 after the Fed decision. The base case is a BOJ hike on Friday that pulls USD/JPY back through 154.00 toward the 153.40 low, a decline of 169 pips. A BOJ that signals additional increases would open 152.00.
The upside case requires a hawkish Fed dot plot and a dovish BOJ at the same time. Only a daily close above 156.15 would break the September downtrend and open 158.67. Any move toward 160 would run directly into the Finance Ministry's intervention zone, and the July 31 operation showed officials are willing to force an 877-pip reversal. A Brent move toward $115 is the main external risk that could push the pair higher despite a BOJ hike.
The 30-day forecast range is 152.00 to 158.67, with 155.21 to 155.47 as the pivot zone. Below the pivot, BOJ tightening, carry trade unwinding and repatriation carry USD/JPY toward 153.40 and 152.00. Above 156.15, the Fed's rate advantage and oil-driven trade deficits push toward 158.67, where intervention risk caps further gains. Until Friday's BOJ decision is public, rallies toward 156.15 are the higher-probability sell zone, and the 153.40 target stays conditional on the BOJ delivering its hike.