USD/JPY on High Alert as Central Banks Prepare to Make Their Move

The USD/JPY pair is making headlines as both the Federal Reserve and Bank of Japan prepare to release interest rate decisions this week. The US dollar has been rising against the Japanese yen, with questions surrounding its next move.

Central banks' announcements will likely intensify market focus on the pair. With a 92% possibility of a hike according to the FedWatch tool, the short-term structure is turning bullish again, indicating resistance at ¥156. The stochastic oscillator is starting to cross into an oversold condition.

The technical setup, bouncing off ¥153, looks good. However, the market's reaction to both central banks' announcements will be crucial in determining its direction. If the 156.33 level can be cleared, momentum may pick up to the upside.

Certainly, the pay differential between the two currencies and the hawkish tone from Federal Reserve member Kevin Warsh could drive prices higher during the press conference. Alternatively, a breakdown below ¥152 would be a negative sign.