USDJPY corrects as the yen weakens ahead of the Fed meeting

The yen's strengthening has stalled, with the price trading in a local sideways trend. The USDJPY rate currently stands at 155.01. Find out more in our analysis for 16 September 2026.

USDJPY forecast: key takeaways

• US inflation came in line with the forecast at 3.4% year-on-year
• According to CME FedWatch, the Federal Reserve may raise its policy rate as early as today
• The market is awaiting the Federal Reserve's policy rate decision this Wednesday
• USDJPY forecast for 16 September 2026: 156.25

Fundamental analysis

USDJPY fundamental analysis for 16 September 2026 suggests that the balance is shifting slightly in favour of the US dollar in the short term. The market estimates the likelihood of a 25-basis-point interest rate hike by the Federal Reserve, to a range of 3.75–4.00%, at approximately 92.4%. Such a high probability means that the rate hike itself is already largely factored into current prices; however, expectations of further monetary policy tightening continue to support the US currency. An additional factor is the rise in the US 10-year Treasury yield towards 5%, which keeps dollar-denominated assets attractive and maintains a substantial gap between US and Japanese interest rates.

At the same time, the upside potential for the USDJPY pair is significantly constrained by Bank of Japan policy. The market expects the Japanese regulator to raise its interest rate by another 25 basis points, to 1.25%, at its upcoming meeting. Expectations of further monetary policy normalisation have already led to a notable strengthening of the yen: the USDJPY pair previously fell to around 152.89, marking the Japanese currency's strongest rally in a long time. If the Bank of Japan confirms its readiness to continue raising rates and signals that the terminal rate could exceed 2%, the yield gap between the US and Japan will begin to narrow gradually.

Meanwhile, high oil prices remain a significant negative factor for the Japanese yen. Japan is a major energy importer, so Brent prices above 100 USD per barrel increase import costs, worsen the country's terms of trade, and increase demand from Japanese companies for foreign currency to pay for energy supplies. This partly offsets the positive effect of a Bank of Japan rate hike.

Technical outlook

On the daily USDJPY chart, the price has formed a support level at 152.95. The nearest resistance level lies at 156.75. On the H4 timeframe, support is located near 154.70, while resistance has formed at 155.45. Despite the ongoing sideways movement, an upward correction remains likely. If the price recovers, the first target for buyers could be 156.25.

An alternative scenario suggests a further decline in the USDJPY rate. If the price consolidates firmly below the 152.85 support level, selling pressure could increase, opening the way towards the next target around 151.55.

USDJPY overview

• Asset: USDJPY
• Timeframe: H4 (Intraday)
• Trend: bearish
• Key resistance levels: 155.45 and 156.75
• Key support levels: 154.70 and 152.95

USDJPY trading scenario for today

Main scenario (Buy Limit)

Consolidation above the 154.40 resistance level would confirm the start of a correction and create conditions for further USDJPY growth.

• Current price: 155.01
• Entry level: 154.85
• Stop loss: 154.35
• Take profit: 156.25
• Risk-to-reward ratio: above 1:2.8

The trade idea is valid until 8:00 AM on 17 September 2026 (server time, UTC+3).

Risk factors

Key risk factors for the USDJPY outlook remain a more hawkish-than-expected Federal Reserve stance, a further rise in US Treasury yields, and persistently high inflation, which could support the dollar and lead to a stronger rise in the pair. Conversely, there is a risk of more aggressive monetary tightening by the Bank of Japan: a rate hike and signals that monetary policy normalisation will continue could accelerate the yen’s appreciation and push the USDJPY rate lower again. High oil prices create additional uncertainty, as they worsen Japan's terms of trade while also increasing inflation risks and raising the likelihood of further policy tightening by both central banks.

Summary

In the short term, the baseline scenario for the USDJPY pair can be viewed as moderately positive, with potential for a further corrective rise towards 156.50, as expectations of a Federal Reserve rate hike and US Treasury yields near 5% continue to support the dollar. However, the medium-term outlook remains considerably less clear. If the Bank of Japan raises its rate and confirms its intention to continue tightening policy, while the Federal Reserve does not provide a clear signal of further rate hikes after the September increase, the divergence in expected rate paths could begin to favour the yen. USDJPY technical analysis suggests a correction towards 156.25.

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