VT 
As markets brace for a pivotal week of central bank decisions, the USD/JPY pair finds itself at the intersection of macro policy shifts and technical momentum. With the Federal Reserve and Bank of Japan both scheduled to announce rate decisions on October 30, market participants are watching for signals that could reshape currency dynamics heading into year-end.
Macro Focus: Fed Easing vs BoJ Tightening
The Federal Reserve is widely expected to deliver a 25–50 bps rate cut, marking a dovish turn amid signs of cooling growth. Advance U.S. GDP is forecast at 3.00% (down from 3.80%), and Core PCE inflation is holding steady at 0.20% m/m, both of which are indicators that support a more accommodative stance. However, the real market driver will be Chair Powell’s tone: A cautious or data-dependent message could stabilise the dollar, while a clear easing bias may pressure it lower.
| Date | Currency | Event | Forecast | Previous |
|---|---|---|---|---|
| 30 Oct | USD | Federal Funds Rate | 4.00% | 4.25% |
| 30 Oct | JPY | BoJ Policy Rate | 0.50% | 0.50% |
| 30 Oct | USD | Advance GDP q/q | 3.00% | 3.80% |
| 31 Oct | USD | Core PCE Price Index m/m | 0.20% | 0.20% |
In contrast, the Bank of Japan is expected to hold rates at 0.50%, but with growing anticipation of a December hike. The core CPI of Japan remains elevated at 2.9% y/y, and services PMI at 52.4 signals resilient domestic demand. While manufacturing PMI lags at 48.3, the BoJ may lean hawkish to preempt inflation persistence. Markets will be watching for any hints of liftoff timing or balance sheet adjustments.
Adding to the backdrop is the recent election of Sanae Takaichi as the new Prime Minister of Japan, a historic shift that could influence fiscal-monetary coordination. Her pro-growth stance and emphasis on wage-driven inflation may embolden the BoJ to normalize policy sooner than expected.
Technical Analysis: Bullish Breakout in Play
The USD/JPY pair has broken above the key resistance at 151.82, confirming a bullish wave structure and opening the door to further upside.
- Resistance: 154.30 for short-term and 157.57 for longer-term
- Support: 149.00 as breakout pivot, 146.60 as corrective support and 145.00 as deeper downside buffer
- Bullish take: Enter long on a retest of 149.00 with confirmation, or on momentum above 152.00. Target 154.30 and 157.57, with stop-loss below 148.50.
- Bearish view: If price breaks below 149.00 with volume, consider short or hedge. Target 146.60 and lower with stop-loss above 152.50.
- Range play: If price consolidates between 149.00 and 152.00, trade the range with tight stops until breakout or breakdown.
Volatility Ahead as Policy Divergence Peaks
With the Fed leaning dovish and the BoJ potentially hawkish, rate differentials may begin to narrow, putting downward pressure on USDJPY despite the bullish technical setup. A surprise Fed cut or soft tone could accelerate yen strength, while a steady BoJ could reinforce the breakout. As the USDJPY is technically bullish but fundamentally vulnerable, traders should stay nimble and monitor between 149.00 to 152.00 closely, always ready to pivot as central bank signals unfold.
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