Fed Hike Puts Pressure on BoJ as USD/JPY Tests Key Resistance
The US dollar's yield advantage over the yen has been reinforced by the Federal Reserve's rate hike, causing the USD/JPY to test key resistance levels. The Fed raised its benchmark interest rate to 3.75-4.00% in a move that signals further tightening, making the US dollar more attractive than the yen. This hawkish stance from the Fed has boosted the dollar, pushing the USD/JPY towards an intraday high of 156.41 on September 16, 2026.
The Bank of Japan's (BoJ) guidance is crucial in sustaining the yen's strength, and a hike to 1.25% is largely priced in. However, if BoJ Governor Ueda signals further tightening, it could support the yen's value. The composition of Japan's Consumer Price Index (CPI) also matters, as stronger services and underlying inflation could lead to further BoJ hikes.
The key resistance level for USD/JPY is 156.13/50, with a break below 155.45 potentially exposing lower targets such as 154.47, 153.70, and 152.65/55. On the other hand, if the pair breaks above 156.50, it could shift focus to 157.20.