USD/JPY Price Forecast - (JPY=X) Poised to Break 153.28 as Fed and BoJ Decisions Drive Price Toward 155.88

USD/JPY: Momentum Stays Upbeat Into Fed–BoJ Week as 153.28 Caps, 155.88 Looms

USD/JPY is pressing the year’s highs with spot holding less than 50 pips beneath the early-October peak at 153.28, after finishing the week near 152.87. The pair has shrugged off traditional drivers like rate-differentials in recent sessions, even as a full 25 bp Fed cut to 3.75%–4.00% is priced for Wednesday and the Bank of Japan is widely expected to keep policy steady. Price action remains unequivocally bullish: RSI(14) is trending higher above 50 without overbought stress and MACD has crossed up through its signal line in positive territory, validating upside momentum while keeping dip-buying the path of least resistance.

Positioning Context: Politics, Energy, and a New Correlation Map

Two transient supports have underpinned USD/JPY’s rise. First, Japan’s political reset—Sanae Takaichi’s elevation raised expectations for a more expansionary fiscal stance—which leans dovish for BoJ policy optics in the near term. Second, the late-week jump in energy prices hurt the yen given Japan’s net-importer profile. More structurally, traders should note the pair’s strengthening linkage to relative nominal growth expectations rather than simple UST–JGB spreads. A 0.75 correlation to the U.S.–Japan 2s10s differential says the market is trafficking in growth outperformance rather than raw rate levels, an important nuance when headline spread correlations temporarily fade.

Fed Watch: A Cut Is Baked In—Guidance and QT Timing Will Move USD/JPY

The FOMC is fully priced to trim the target range by 25 bps to 3.75%–4.00%. No new dot plot arrives, so the statement tone, the vote split, and Chair Powell’s presser do the heavy lifting. A Miran dissent for 50 bps would be dovish theatrics but unlikely to set the path; a surprise bloc dissent for “no change” would be the genuine USD-positive twist. Keep an eye on balance sheet language: an early end to QT, while broadly expected by year-end, would marginally soften the dollar if announced this meeting; a December signal would likely be USD-neutral near term. With a soft September inflation print and mixed labor signals, the bar for a hawkish surprise is higher than for a dovish lean, but the tape is telling you USD/JPY trades momentum, not narrative, right now.

BoJ Preview: Policy Hold Favored; Board Vote Split and Ueda’s Tone Are the Tell

Consensus looks for no move from the BoJ this week with the policy rate steady and YCC flexibility left untouched. The board’s vote distribution matters: growing support for a 25 bp hike would pull rate-hike pricing forward toward December and strengthen JPY; a narrower pro-hike faction would do the opposite. Governor Ueda has sounded cautious as domestic inflation shows signs of moderating at the margin; a dovish press conference would re-anchor USD/JPY topside risks, while any hint that the board sees durable wage-price traction would quickly tug the pair lower.

Japan Data Catalysts: Tokyo CPI, Retail Sales, Labor, Confidence

Tokyo CPI is the key lead indicator for nationwide inflation and is expected to accelerate to roughly 2.7% y/y from 2.5%. A hot print re-energizes December hike speculation and favors JPY strength; a soft read does the reverse. Retail sales are seen rebounding ~0.7% y/y after –1.1%, important because private consumption is ~55% of GDP. The unemployment rate is projected to dip to 2.5% from 2.6%; a tighter labor market strengthens the wage narrative the BoJ needs to justify normalization. Consumer confidence edging up toward 35.6 would complement that story, though the level remains subdued by historical standards.