USD/JPY Forecast: Pivotal Moment Ahead of Fed and BoJ Decisions

The USD/JPY pair has been recovering after rebounding from its recent lows, trading around the pivotal 155.00 handle ahead of the Federal Reserve's rate decision.

Investors have been focusing on the yield differential between US rates and the rest of the world, which remains a significant headwind for major FX pairs like EUR/USD, CHF/USD, and JPY/USD.

The Bank of Japan is also set to raise rates by 25 basis points on Friday, but much of that move is already reflected in market pricing, leaving investors looking for guidance from Governor Ueda.

A clean break above the 155.00-155.30 area could open the way towards 156.00-157.00 zone next, while a failure to break and hold above this area would weaken the near-term bullish case.