Investors await the Fed’s policy announcement, with a 33.7% chance of a 25-basis-point hike priced in, keeping USD/JPY near multi-decade highs.
USD/JPY remains steady at 163.80, virtually unchanged as traders adopt a cautious stance before the Federal Reserve’s monetary policy decision. The pair has hovered near a multi-decade high of 163.99, with market participants avoiding significant positions ahead of the announcement.
The Fed is expected to hold its benchmark rate in the 3.5%-3.75% range, though markets have priced in a 33.7% probability of a 25-basis-point hike. Attention will focus on Fed Chair Jerome Powell’s comments for clues on future policy direction, with a hawkish tone potentially supporting the USD further.
A dovish surprise, however, could trigger a sharp correction in the USD, particularly against the JPY, given the pair’s elevated levels and vulnerability to shifts in sentiment.