BOJ Meeting Looms Large as Markets Digest Fed Decision

The Federal Reserve's recent decision to keep interest rates unchanged has shifted market attention to the Bank of Japan's upcoming policy meeting.

This week, markets are expected to be influenced by a combination of factors, including the BOJ's decision, elevated US Treasury yields, persistent Middle East tensions, and rising expectations for a September rate hike in the US.

The CME FedWatch Tool indicates that there is over a 60% probability of a 25-basis-point rate hike in September, which continues to support the US dollar while limiting broader risk appetite.

Looking at technical scenarios, USD/JPY is showing signs of pullback risks below the 164 resistance level. The pair's weekly chart reflects two ascending channels, and price is attempting to break above the midpoints of both channels. This creates a critical confluence zone that could open the way toward the Fibonacci extensions of the February-April-May 2026 cycle.