USD/JPY Forecast: Dollar Struggles Below 157.20 as BoJ and Fed Decisions Near

The US dollar is struggling to extend its recovery against the Japanese yen, with USD/JPY trading near 157.13 on Monday as investors prepare for a week of major central-bank decisions. Buyers have defended support around 156.00, but the pair has yet to establish a convincing move above 157.00. The immediate outlook remains cautious, with resistance between 157.20 and 157.50 likely to determine whether the rebound gains traction or sellers regain control.

Fed and BoJ Decisions Drive Currency Outlook

The Federal Reserve is scheduled to announce its policy decision on October 28, following a two-day meeting. Markets broadly expect rates to remain unchanged, leaving investors focused on Chair Kevin Warsh’s comments for clues about the outlook for borrowing costs. Persistent inflation could limit the scope for easing, while any indication that rates may need to rise later would potentially support the dollar.

The Bank of Japan meets on October 29–30 and is widely expected to maintain its policy rate at 1.25%. However, policymakers may signal that further tightening remains possible as energy costs and import prices add to inflation pressures. A more hawkish message could support the yen by narrowing the expected interest-rate gap between Japan and the United States.

Investors will also monitor US economic releases, including the Personal Consumption Expenditures (PCE) Price Index, a key inflation measure used by the Fed. Stronger-than-expected inflation could reinforce expectations of restrictive monetary policy, while softer readings may weigh on the dollar. The combination of policy guidance and inflation data leaves USD/JPY vulnerable to sharp moves in either direction.

USD/JPY Technical Levels to Watch

USD/JPY was quoted near 157.13 in the supplied market snapshot, reflecting a fragile recovery from support around 156.00. On the four-hour chart, the Relative Strength Index (RSI) has recovered into the 40s, while the Moving Average Convergence Divergence (MACD) indicator remains subdued. Together, these signals suggest that buying momentum has improved but has not yet established a strong bullish trend.

The main technical levels are:

• Resistance: 157.20–157.50, the former range-support area.
• Higher targets: 158.40, the October 21 high, followed by 159.00.
• Initial support: 156.10–156.40, near recent lows.
• Lower target: 155.35, the September 17 low.

A sustained move above 157.50 could open the way toward 158.40. Conversely, a decisive break below 156.10 would weaken the recovery and expose 155.35. Until either boundary gives way, range trading remains a plausible near-term outcome.

Conclusion

USD/JPY remains caught between fragile buying interest and resistance ahead of major policy announcements. The 157.20–157.50 zone is the immediate hurdle for dollar bulls, while 156.10–156.40 remains the key downside area. A breakout supported by central-bank guidance and economic data would provide a clearer directional signal. Until then, traders should treat the pair cautiously, as shifts in rate expectations could quickly reverse its latest move.