Title: USD/JPY Outlook: Bulls Maintain Support at 147.65 as Market Eyes Fed and BoJ Policy Moves
By: Skerdian Meta
Originally published at FX Leaders (July 27, 2025)
Source: https://www.fxleaders.com/news/2025/07/27/usd-jpy-forecast-bulls-hold-147-65-ahead-of-fed-boj-showdown/
The USD/JPY currency pair continues to attract significant attention as it maintains position above the 147.65 support level. Investors are positioning themselves ahead of two key central bank events that are expected to provide clarity on monetary policy direction—the upcoming decisions from the Federal Reserve and the Bank of Japan (BoJ). The Federal Open Market Committee (FOMC) is expected to set the tone mid-week, with the BoJ following shortly after. The interplay between divergent policy paths could significantly influence the next leg of movement in USD/JPY.
Current Market Overview
– The USD/JPY pair has shown resilience, holding firm above the 147.65 mark, signaling continuing bullish sentiment.
– Traders have shown caution as volatility remains subdued ahead of the Federal Reserve’s policy decision.
– Market expectations are divided, with participants keenly watching for clues on interest rate strategies from both central banks.
– The different trajectories on inflation management could lead to substantial movements in the currency pair.
Federal Reserve: All Eyes on Inflation and Rate Guidance
As the Federal Reserve heads into its latest policy meeting, the spotlight is firmly on how the FOMC will interpret the evolving dynamics of US inflation and employment data. While the market expects no rate hike in this meeting, the central bank’s remarks and economic projections could offer important insights.
Key points regarding the Fed:
– Inflation continues to track above the Federal Reserve’s target of 2 percent, but recent data suggests cooling in core measures.
– Labor market strength remains a pillar in the Fed’s calculus, though gains have moderated over the last two quarters.
– The Fed is widely expected to keep interest rates unchanged at its July meeting, maintaining the target range at 5.25–5.50 percent.
– Market participants will scrutinize Chair Jerome Powell’s statement for hawkish or dovish undertones as policymakers navigate the balancing act of sustained inflation control without inducing a sharp economic slowdown.
Implications for USD:
– A cautiously hawkish tone could support the US dollar, strengthening USD/JPY further above current levels.
– Any signals of future rate cuts would weaken USD sentiment and open the possibility for a downward move in the pair.
– A neutral stance with emphasis on data dependency is likely, giving limited immediate direction but setting the stage for volatility with incoming economic releases.
Bank of Japan: Intervention Watch as Yen Weakness Lingers
The Bank of Japan faces its own delicate situation. With the yen softening persistently, Japan’s central bankers are receiving mounting pressure to intervene—either verbally or structurally—to counteract excessive depreciation and rising import prices.
Key considerations for the BoJ:
– Inflation in Japan has exceeded the 2 percent target for over a year, prompting calls for less accommodative monetary policy.
– Despite this, the BoJ has kept its ultra-loose stance with rates at or near 0 percent, citing the need for broader wage growth and sustainable inflation.
– Any indication toward policy tightening would be a significant shift in the BoJ’s strategy, possibly leading to stronger JPY performance.
Risk of intervention:
– Japanese finance officials have recently increased their warnings about the risks associated with sharp declines in the yen.
– Levels near 148 could trigger verbal or actual intervention from the Ministry of Finance, which in the past has stepped in when USD/JPY breached the 150 mark.
– Traders remain watchful of central bank rhetoric, as even suggestions of policy shifts could dictate positioning in the short term.
Technical Analysis: USD/JPY at a Critical Juncture
From a technical standpoint, USD/JPY displays a bullish structure
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