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The USD/JPY pair fell to 147.92 on Wednesday, with the Japanese yen recovering some of its early-week losses as the US dollar softened ahead of the Federal Reserve’s policy meeting.

While the Fed is widely expected to keep rates on hold, market focus remains squarely on whether policymakers will signal a potential rate cut in September.

Simultaneously, investors are assessing the outcome of this week’s US–China trade talks in Stockholm, which concluded on Tuesday without an extension of the current trade truce.

Domestically, attention turns to the upcoming Bank of Japan (BoJ) policy decision. The central bank is forecast to maintain its current interest rate as it evaluates the economic impact of US tariffs. The BoJ’s quarterly outlook report may also see an upward revision to its inflation forecasts.

Political uncertainty adds another layer of complexity, with growing pressure on Prime Minister Shigeru Ishiba to resign. However, the Prime Minister has firmly denied any intention to step down.

Notably, despite broader US dollar strength across markets, the USD/JPY pair has not fully reflected this trend due to counterbalancing factors.

Technical Analysis: USD/JPY

H4 Chart:
 

(Click on image to enlarge)

On the H4 chart, USD/JPY continues to consolidate around 147.90, having extended its range upwards to 148.77. Following a retest of 147.90 from above, the next likely move is a push higher towards 149.11, with a potential continuation towards 150.30 if bullish momentum holds. This scenario is supported by the MACD indicator, where the signal line remains above zero and points firmly upwards.

H1 Chart:
 

(Click on image to enlarge)

Switching to the H1 chart, the pair is forming a consolidation range around 147.90. A breakout to the upside could see a move towards 149.11, followed by a retracement to 148.44. Conversely, a downside break may trigger a decline towards 145.90. The Stochastic oscillator aligns with this outlook, as its signal line sits above 20 and is trending upwards.
 

Conclusion

The USD/JPY pair remains in a corrective phase, with near-term direction hinging on policy signals from the Fed and BoJ. While technical indicators currently support a bullish bias, traders should remain alert to the possibility of breakout moves as confirmation.

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