Last week, the US Federal Reserve released its and cut interest rates by 25 basis points, matching market expectations.
The year still has major events ahead. Later this week, the Bank of Japan will decide on . Markets see a strong chance, close to 90%, of a 25 basis point rate hike.
The economic calendar also remains busy. Key updates include delayed data from the and . Investors currently expect rates to stay where they are. Still, weak economic data can quickly shift expectations, as seen in recent market moves and sharp changes in rate forecasts.
At the same time, the pair remains range-bound as traders wait for the Bank of Japan decision.
Japan Rate Hike Seen as All but Certain
As explained in the analysis two weeks ago, the Bank of Japan has been sending clear hawkish signals to prepare markets for a rate hike. This approach has worked. A hike now feels expected rather than surprising.
These signals have also capped gains in the USD/JPY pair, which remains in a sideways range as markets wait for the decision. If the Bank of Japan delivers the expected hike, attention will shift to the policy statement and any hints about when the next increase could come in what remains a slow tightening cycle.
It would be unrealistic to expect the Bank of Japan, which usually moves cautiously, to raise rates at every meeting early next year. A more likely trigger comes from spring wage negotiations, which play a major role in shaping inflation. Current forecasts point to a 5 percent wage increase, according to Japan’s largest labor union representing millions of workers.
Macroeconomic Calendar Brings Long-Awaited Data
Today, Tuesday, fresh data from the US labor market will be released. Because of the timing, markets only have a consensus estimate for the unemployment rate, which is expected to stay unchanged at 4.4 percent year on year.
On Thursday, new data on price changes in the US economy will also be published. These figures matter, yet the Federal Reserve’s current messaging shows a stronger focus on the labor market. Last week interest rate cut supports this view and highlights jobs data as the main priority.
The week ends with Japan inflation data on Friday and the Bank of Japan key interest rate decision. Together, these events should set the direction for the USD/JPY pair through at least the end of the year.
Where Is USD/JPY Headed Next?
USD/JPY is trading in a short-term sideways range, with support near 155 yen per dollar. A clear break below this level could trigger a deeper move lower, with the main target near 151 yen per dollar, where the rising trend line and key support meet.
On the upside, the 158 to 159 yen per dollar zone is the key resistance for buyers. A break above this area would open the door for a move toward the long-term highs.
****Below are the key ways an InvestingPro subscription can enhance your stock market investing performance:
ProPicks AI: AI-managed stock picks every month, with several picks that have already taken off in November and in the long term.
Warren AI: Investing.com’s AI tool provides real-time market insights, advanced chart analysis, and personalized trading data to help traders make quick, data-driven decisions.
Fair Value: This feature aggregates 17 institutional-grade valuation models to cut through the noise and show you which stocks are overhyped, undervalued, or fairly priced.
1,200+ Financial Metrics at Your Fingertips: From debt ratios and profitability to analyst earnings revisions, you’ll have everything professional investors use to analyze stocks in one clean dashboard.
Institutional-Grade News & Market Insights: Stay ahead of market moves with exclusive headlines and data-driven analysis.
A Distraction-Free Research Experience: No pop-ups. No clutter. No ads. Just streamlined tools built for smart decision-making.
Not a Pro member yet?
Already an InvestingPro user? Then jump straight to the list of picks here.
Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk belongs to the investor. We also do not provide any investment advisory services.
-1024x768.jpg "Red Snapper Used as Cudgel by Fed Judge")
