USD/JPY posted solid gains of nearly 0.40% on Wednesday after the Federal Reserve (Fed) kept interest rates steady, hinting at just one rate cut in 2026. At the time of writing, the pair trades at around 159.60, remaining volatile.
Yen weakens as Fed hints limited easing, Powell reinforces cautious stance
In his press conference, Fed Chair Jerome Powell struck a neutral stance, saying the central bank is taking a meeting-by-meeting approach and that the current policy stance is appropriate. He added that the main thing they are looking for in inflation is to see progress on goods inflation, "to understand if we are making progress."
Powell commented that the lack of progress in inflation would delay an interest rate cut, adding that, "We believe we will see progress on tariff inflation, but may take more time."
Regarding the economy, he added that it is doing pretty well and that no one knows the effects of the Middle East conflict. He said that inflation overshoot is attributed to goods and tariffs.
Aside from Powell's press conference, the Fed held rates unchanged, with one dissenter: Governor Stephen Miran.
US economic projections show the central bank is eyeing one 25-basis-point rate cut in 2026 and one in 2027. The economy is expected to grow 2.4% in 2026 and 2.3% in the following year. Inflation is projected to jump from 2.4% to 2.7%, with underlying prices expected to rise to 2.7%, up from 2.5%.
Yen traders wait for the BoJ
In Japan, the schedule will feature Industrial Production figures on Thursday, followed by the Bank of Japan's monetary policy decision on Friday, in which the BoJ is projected to hold rates unchanged.
USD/JPY Price Forecast: Technical outlook
In the daily chart, USD/JPY trades at 159.81. The near-term bias stays bullish as price pushes further above the clustered simple moving averages around 156.50, confirming an established uptrend structure. The RSI at 67 shows firm upside momentum without yet entering extreme overbought territory, aligning with persistent buying pressure. The pair also respects an ascending support trend line from 152.10, reinforcing the series of higher lows and underpinning the current advance.
Immediate support emerges at 159.00, with the rising trend line and the 156.50 moving average zone forming a stronger demand band beneath. A break below that band would expose deeper support near 154.50, where prior consolidation lies. On the upside, initial resistance is seen near 160.50, ahead of the 161.50 area where the descending resistance trend line projected from 159.23 converges with recent swing highs. A daily close above 161.50 would confirm a continuation of the bullish leg and open the way toward higher highs in the coming sessions.
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