Japanese yen is trading quietly on Wednesday. USD/JPY is trading at 157.68, down 0.07% at the time of writing.

Fed expected to hold rates

The Federal Reserve meets later today and is widely expected to keep rates unchanged for a sixth straight time. The target range for the benchmark rate of 5.25% to 5.5% hasn’t changed since July and the Fed has shown that it is willing to prolong its “higher for longer” stance as long as is needed. Fed Chair Powell is expected to have a hawkish message for the market, which would likely provide the US dollar with a boost.

The Fed’s battle with inflation, which was running smoothly, has hit a bump in the road as consumer inflation is moving higher. Underlying inflation indicators have been hotter than expected and Fed Chair Powell has signaled that he will delay plans to cut rates. Powell could reiterate that message in today’s rates statement and the follow-up press conference.

The market will be looking for hints about the Fed’s rate cut plans. Earlier in the year, Powell signaled that he expected to lower rates three times in 2024, but that scenario is unlikely due to the unwanted inflation surprise. It’s conceivable that the Fed won’t raise rates until 2025, as Fed members will want to see evidence of sustainable price stability before shifting rate policy.

It has been a roller-coaster week for the Japanese yen, which spiked above the 160 level, a new 34-year record, on Monday, raising speculation that Tokyo had intervened in the currency markets to prop up the ailing yen. A hawkish Fed meeting later today could give the US dollar a boost against the majors, including the yen.

USD/JPY Technical

• USD/JPY has pushed above resistance at 156.62 and 156.80. Above, there is resistance at 157.30
• There is support at 156.30 and 156.12

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