USDJPY rises as government bond yield differential supports the dollar

The probability of another Federal Reserve rate hike as early as October is 55%. The current price is 157.78. Find out more in our analysis for 23 September 2026.

USDJPY forecast: key takeaways

• According to Reuters, the market estimates the probability of another rate hike at the October meeting at around 55%
• The Bank of Japan raised the interest rate to 1.25%
• USDJPY forecast for 23 September 2026: 158.90

Fundamental analysis

The fundamental backdrop for USDJPY currently remains largely in favour of the dollar despite the Bank of Japan's tighter monetary policy. On 16 September, the Federal Reserve raised the interest rate by 25 basis points to a range of 3.75–4.00%. Moreover, Federal Reserve officials continue to point to elevated inflation risks and allow for further policy tightening. The resilience of the US economy provides additional support to the dollar.

The Bank of Japan has also shifted towards tighter policy. On 18 September, the regulator raised the interest rate from 1.00% to 1.25%, the highest level in 31 years. The Bank of Japan governor indicated that further rate hikes remain possible and did not rule out either consecutive increases or a 50-basis-point move if inflation accelerates. However, the decision was adopted by a 7–2 vote, with two board members favouring a more cautious policy.

Today's USDJPY forecast is based on the view that more hawkish expectations for Federal Reserve policy and the Bank of Japan's continued caution are still supporting the dollar's advantage through higher yields. At the same time, the risk of currency intervention by the Japanese authorities and the possibility of further BoJ rate hikes could limit further yen weakness.

Technical outlook

On the D1 chart, USDJPY formed resistance at 157.55 and support at 155.30. On the H4 timeframe, support formed at 155.90 and resistance at 157.90. In this case, consolidation above this level could be considered a signal for the continuation of the uptrend. The upward momentum has not yet been exhausted. The first upside target is 158.50.

At the same time, the USDJPY forecast also considers another market scenario: USDJPY could reverse its trend and move towards the 154.65 area. For this to happen, however, the price would need to break below the 155.30 support level.

USDJPY overview

• Asset: USDJPY
• Timeframe: H4 (Intraday)
• Trend: bullish
• Key resistance levels: 157.90 and 157.55
• Key support levels: 155.90 and 155.30

USDJPY trading scenario for today

Trading scenario (Buy Stop)

Consolidation above the 157.90 resistance level would confirm the continuation of the uptrend and create conditions for opening long positions.

• Current price: 157.78
• Entry level: 157.95
• Take Profit: 158.90
• Stop Loss: 157.60
• Risk-to-reward ratio: above 1:2.7

The trade idea is valid until 08:00 AM on 24 September 2026 (server time, UTC+3).

Risk factors

The main risks to the USDJPY outlook include more dovish Federal Reserve rhetoric or weak US economic data, which could reduce US bond yields and put pressure on the dollar. From Japan, the yen could receive support from more hawkish signals from the Bank of Japan, accelerating inflation, and a higher probability of further rate hikes. An additional factor remains the risk of currency intervention by the Japanese authorities if the yen weakens excessively.

Summary

In the short term, fundamental factors provide somewhat more support for further growth in USDJPY. The Federal Reserve has already raised interest rates and retains the option of additional tightening, while the Bank of Japan's rate increase to 1.25% has so far failed to offset the wide yield gap between the US and Japan. USDJPY technical analysis suggests further gains towards the 158.90 level.

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