USD/JPY is trading near the 159.50 price zone, gaining ground during the American session as investors await the Federal Reserve's monetary policy decision. The Fed is expected to keep rates on hold later today, with the release of the Summary of Economic Projections (SEP) and a press conference by Fed Chair Jerome Powell scheduled after the announcement. Market participants are closely monitoring the potential impact of the United States's and Israel's war on Iran on the Fed’s policy decisions, particularly regarding inflation and energy prices [1].
The Bank of Japan (BoJ) is also expected to leave its benchmark interest rate unchanged at 0.75% following its decision early Thursday, maintaining a cautious stance in light of the Iran war-related spike in energy prices. Despite this caution, the BoJ is anticipated to uphold a hawkish outlook [1].
In the US, the core February Producer Price Index (PPI) was reported at 3.9% year-over-year, exceeding the 3.7% expected and signaling rising inflation. This figure does not include energy price inflation stemming from the Middle East conflict. The higher-than-expected PPI has increased risk among investors, providing support for the US Dollar in the near term [1].
Technical analysis indicates that USD/JPY trades at 159.43 with a mild bullish bias, as it remains above key moving averages and shows recovering upside momentum. Immediate support is noted at 158.96, with resistance at 159.59. A sustained break above resistance could lead to fresh highs, while deeper pullbacks would test support levels but maintain the broader bullish structure as long as the price stays above the 100-period SMA near 157.70 [1].
CONCLUSION
USD/JPY has strengthened ahead of key central bank decisions, supported by rising US inflation and cautious but hawkish stances from both the Fed and BoJ. The pair's technical outlook remains bullish, with investors watching for further developments in monetary policy and geopolitical tensions. Market sentiment is moderately positive, reflecting underlying demand for the US Dollar.