USD/JPY: Dollar Nears ¥149 Moments Before Pair Gets Sandwiched Between Rate Decisions

It’s showtime! Dollar-yen is staring at not one but two central bank decisions. Is the Fed going to cut? Is the BoJ going to hike?

💱 Double Whammy?

• The USDJPY traded around ¥148.60 early Tuesday, hovering near a four-month high, as traders braced for a one-two punch of rate decisions from the Federal Reserve and the Bank of Japan. The pair has been on a tear, fueled by diverging rate expectations and macro crosswinds. So now what?
• With Fed Chair Jerome Powell expected to keep rates steady at 4.5%, traders are watching closely for signals of a likely cut to borrowing costs at the next meeting — a move that markets may have mostly priced in.
• The BoJ’s decision comes right after. Expectations? Another hold. But with inflation rising and the yen still under pressure, the margin for error is shrinking fast.

📊 Fed Expected to Hold

• The FOMC meeting wraps Wednesday, with policymakers expected to leave interest rates unchanged. The Fed has held steady for months now, citing slowing inflation and “wait-and-see” vibes. But traders see this week as a final calm before a potential pivot.
• A no-change decision this month could tee up a rate cut as early as September, especially if economic data continues to soften. But there’s also Donald Trump going off on social and before reporters, saying Powell must lower rates immediately. Can Trump outweigh the committee?
• The dollar has remained strong amid sticky yields and global uncertainty — but if Powell even hints at easing, expect the dollar-yen to start seeking direction, and fast.

👊 Hold? Or Hike?

• The Bank of Japan meets a day after the Fed, and the consensus is for a hold. But that may not give the yen the relief it needs.
• Inflation in Japan has picked up — a break from years of deflation — and pressure is mounting for policymakers to finally lift rates again. A hike could strengthen the yen, but it risks tightening credit conditions just as growth is slowing.
• If the BoJ holds and sounds dovish, the dollar-yen could break ¥149 and test multi-year highs. If it surprises with a hike? Expect some serious yen moves.