Sure, here is a rewritten version of the article titled “USD/JPY Forecast: Traders Bet on Yen Ahead of the BOJ, Fed Decisions,” originally published by Crispus Nyaga on Invezz on September 17, 2025:
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**USD/JPY Outlook: Markets Position for Yen Strength Ahead of Key Central Bank Meetings**
The USD/JPY currency pair has come under pressure recently as traders adjust their positions ahead of two crucial monetary policy meetings scheduled for this week: the Bank of Japan (BOJ) and the United States Federal Reserve. As market expectations shift around interest rate trajectories and economic outlooks, attention is now focused on how both central banks will act amid persistent macroeconomic uncertainty.
This article breaks down the current climate surrounding the USD/JPY pair, explores factors influencing investor sentiment, and outlines possible scenarios based on upcoming monetary policy decisions.
Original article credit: Crispus Nyaga, Invezz
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### USD/JPY Opens the Week on a Soft Note
The USD/JPY pair entered the week in retreat, dropping from recent highs as anticipation builds for forthcoming decisions from the US Federal Reserve and the Bank of Japan. The modest decline in the pair sets the stage for heightened volatility in days ahead, especially considering the divergence in current monetary policy stances between Tokyo and Washington.
– The USD/JPY traded at 147.70, down slightly from the previous week’s close of 147.92.
– This current level continues to maintain proximity to multi-month highs but reflects early week hesitation from investors.
Market participants are growing cautious, reconsidering USD strength after a prolonged rally. With multiple headwinds now emerging, many traders are beginning to recalibrate expectations on both sides of the currency pair.
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### Central Bank Decisions Loom Ahead
Analysts and investors are closely observing what both the Federal Reserve and the Bank of Japan will announce in their respective monetary policy meetings. These institutions are grappling with differing economic dynamics domestically, which could lead to distinctly different decisions.
#### U.S. Federal Reserve (FOMC)
– The Fed is widely expected to maintain the federal funds rate within the 5.25% to 5.50% range.
– However, key interest lies in the tone of the accompanying statement and Chair Jerome Powell’s post-meeting commentary.
– While inflation continues to moderate, economic resilience, including strong labor market figures and consumer spending, could influence the Fed’s outlook to remain hawkish.
– The release of the Fed’s dot plot will provide a critical update on where policymakers see rates heading into 2024 and beyond.
Investor sentiment in the U.S. remains anchored on data suggesting the Fed might still raise rates one more time this year, depending on inflation readings and labor market conditions.
#### Bank of Japan (BOJ)
– The BOJ’s meeting carries heightened anticipation amid growing speculation that the central bank may begin to pivot away from its ultra-loose monetary policy stance.
– For years, the BOJ has adhered to negative interest rates and yield curve control, setting it apart from global peers.
– Rising domestic inflation and wage growth have fueled expectations that change could be impending.
– However, many analysts still predict that the Bank of Japan will hold rates steady at this meeting, while issuing forward guidance suggesting more concrete policy shifts in the near future.
A key issue is whether Governor Kazuo Ueda will signal a shift in tone. Recent comments indicate that the BOJ might have enough economic data by year-end to consider exiting negative rates if inflation remains above the 2% threshold.
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### Japanese Yen Strength Ahead of the BOJ
The yen has gained steam recently, largely in response to the growing possibility that the BOJ could soon tighten policy. While actual changes may not yet arrive, even the suggestion of a more hawkish outlook could be enough to boost JPY sentiment.
– Investors are increasingly positioning for yen appreciation.
– Net speculative positions have shifted slightly in favor of the JPY in forward markets.
– The likelihood
Explore this further here: USD/JPY trading.