USD/JPY Gives Back Half of Rally as Fed Raises Interest Rates
The Japanese Yen's recent rally has come to an end as the US Federal Reserve raised interest rates. The USD/JPY pair is now trading around 156.50, up from its September low of near 153.00.
According to market analysts, the Bank of Japan's decision on Friday will be crucial in determining the next move for the Yen. The BoJ is expected to raise its policy rate by a quarter point to 1.25%, which would bring it closer to the Fed's midpoint of 3.875%.
The gap between the two central banks' interest rates has barely changed, with the market expecting the BoJ to reach 1.48% by December and 1.85% by mid-2027. The Fed's forecasts have its rate at 4.1% by the end of 2027.
The market is now looking for guidance from the Bank of Japan on Friday, with Governor Ueda facing questions about inflation rates below target. The BoJ's decision will likely influence the next move for the USD/JPY pair.