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Yen Gains as BoJ Hike Expectations Drive USD/JPY Below 156

By Markets Desk · 2026-09-17 · 1 min read
A pair of gold coins resting on a wooden desk next to a stack of paper currency
Illustration: Tradingbird

The Japanese Yen strengthened against the US Dollar on Thursday, with the USD/JPY pair falling to 155.80. This move reflects market anticipation of a 25-basis-point rate hike by the Bank of Japan on Friday.

The USD/JPY exchange rate dropped to 155.80 during the European session on Thursday. This decline reverses a three-day winning streak for the US Dollar. Traders are positioning for a 25-basis-point interest rate increase by the Bank of Japan on Friday. The currency pair now trades below its 50-day Exponential Moving Average.

Japanese government officials emphasized fiscal discipline and economic stability. Economy Minister Minoru Kiuchi stated the goal is to balance growth with sustainable public finances. Finance Minister Satsuki Katayama confirmed that the government will manage debt issuance carefully. Both officials supported the central bank's path toward a stable 2% inflation target.

Federal Reserve Signals Cautious Path

The US Dollar weakened despite a recent 25-basis-point rate hike by the Federal Reserve. The Fed raised rates to a target range of 3.75% to 4.00%. This was the first increase in three years. Chair Kevin Warsh cited persistent inflation as the primary driver for the decision.

Money markets currently price in a 51% probability of another Fed hike in October. This data comes from the CME FedWatch tool. Analysts at MUFG advise caution regarding the Fed's dot plot projections. They note that the median dot for 2026 and 2027 implies one more hike before cuts begin in 2028.

Technical Levels Define Near-Term Trend

The 14-day Relative Strength Index for USD/JPY sits at 43.69. This value indicates neutral momentum without oversold conditions. Price action stabilizes above the nine-day Exponential Moving Average near 155.45. The 50-day EMA at 158.17 acts as the primary resistance level.

Traders watch the 155.45 level as the initial support zone. A sustained break below this area could expose the 151.79 sentiment anchor. This lower level represents the next significant support area. The bearish bias remains intact while price stays below the 158.17 resistance.

Market Context from GN Auto Markets

GN auto markets/forex: currency markets reports that the yen's strength is driven by policy divergence. The Bank of Japan is expected to tighten monetary policy soon. The Federal Reserve is signaling a cautious approach to future hikes. This divergence supports the yen against the dollar.

Based on reporting by FXStreet, compiled by the Tradingbird desk.

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