USD/JPY hovers around the 147.70 level, awaiting the FOMC decision

• The USD/JPY pair trades cautiously at 147.75, just below the year’s high, awaiting the Fed’s monetary policy decision.
• The Dollar Index fell 0.36% to 104.82 amid falling Treasury yields, adding pressure on the dollar ahead of the Fed meeting.
• Fears of Japanese intervention in the currency market are growing, and comments from US Treasury Secretary Janet Yellen and former Japanese Vice Minister Takehiko Nakao fuel uncertainty.

The pair USD/JPY remains moderate at the beginning of the North American session, as traders prepare for the monetary policy decision of the United States Federal Reserve. Furthermore, the risk of intervention by the Japanese authorities in the currency markets prevents buyers from opening new positions. At the time of writing, the pair is trading at 147.75, after reaching a new high of 148.16 so far this year.

Markets await the securities in the Fed’s portfolio, while Japanese authorities hint at intervention in the currency market.

The price of the USD/JPY remains flat, with traders waiting for the president of the Fed, Jerome Powell, and company to comment on the matter. Markets expect the Fed to maintain its aggressive stance, although the Dollar remains pressured, as shown by the Dollar Index (DXY) at 104.82, falling 0.36%. One of the reasons for this move is US Treasury Bond Yields, which are falling, after hitting multi-year highs on Tuesday.

In addition to its rate decision, the Fed will update its economic forecasts for the rest of the year and for 2024 and 2025. Investors should keep an eye on its economic forecasts, which could add more volatility on top of the headlines. Downward revisions to the Federal Fund Rates (FFR) could be considered a dovish reaction by the central bank. In the meantime, keeping them unchanged could add to the mantra of keeping rates “higher for longer.”

Apart from this issue, investors’ fear of a “possible” intervention by the Japanese authorities is gaining strength. US Treasury Secretary Janet Yellen stated that she could understand the intervention of the Japanese authorities in the currency market if it was to control volatility.

Meanwhile, a former Japanese Deputy Finance Minister for International Affairs, Takehiko Nakao, said the Bank of Japan should abandon its ultra-loose monetary policy and that Japan could intervene in currency markets to support the Yen.

USD/JPY Price Analysis: Technical Outlook

Technically, USD/JPY is about to conquer 148.00 and extends its gains towards the daily high of October 31 at 148.84, which if surpassed, USD/JPY could retest 150.00. However, operators remain cautious about possible intervention. On the downside, a drop below the September 20 low at 147.62 could pave the way to test the Tenkan-Sen at 147.03. Below this last level, other support levels emerge. Below this last level, the Senkou Span A stands at 146.66 and the Kijun-Sen at 146.30.