The USDJPY is currently near its 100-day moving average at 146.17 as the Forex market anticipates the FOMC rate decision. The lowest point for the yen today was 146.196, indicating caution among buyers and sellers. Before the FOMC decision at 2 PM ET, the USDJPY remains just above the 100-day moving average at 146.175. Buyers are trying to recover from recent losses at this important level. The direction the market will take after the Fed’s announcement depends on several factors, including inflation and employment forecasts.

Possible Outcomes from the Fed Decision

If the Fed takes a dovish stance, the USDJPY could drop below the 100-day moving average, aiming for a midpoint target of 144.581 from the late December/early January 2022–2023 trading range. Conversely, a hawkish Fed could create resistance near the 200-day moving average at about 148.68, benefiting buyers. Market reactions will depend on the Fed’s tone. Currently, the USDJPY is trading at its lowest point in three months, right at the 100-day moving average, which gives sellers an advantage. If the Fed appears more accommodating, this could change, but for now, the market seems to favor a downward trend. We’re closely monitoring the USDJPY pair as it sits on the critical 100-day moving average at 146.17 ahead of the FOMC decision. The market is cautious, with both buyers and sellers waiting for a clear direction from the Federal Reserve. This technical level is vital, serving as a key defense line for the dollar. Recent economic data indicates that sellers have the upper hand as we expect a dovish Fed. The latest inflation report showed headline CPI dropping to 2.9%, and the recent jobs report revealed a slowdown, with only 150,000 new jobs added in August. These statistics suggest the Fed may have room to ease its policies, which would weaken the dollar.

Trading Strategies During Fed Speculations

For a dovish outcome, traders might consider purchasing put options with a target at 144.58, which represents the 50% midpoint of the previous major trading range. If support breaks, this makes it a logical technical aim. A dovish surprise could speed up this move, making puts on USDJPY an appealing tactic. On the flip side, if the Fed adopts a more hawkish tone, it would be unexpected and could trigger a significant price reversal. If Chair Powell asserts that inflation is still too far from the 2% target, we may see a strong rally. In this case, the pair could bounce back toward the 200-day moving average near 148.68. To prepare for a hawkish surprise, traders might look into buying short-dated call options. This would give them exposure to price increases with limited risk if the dollar unexpectedly strengthens. Given the market’s dovish lean, a hawkish outcome could lead to a notable upward swing. Due to current uncertainties, implied volatility is high. This echoes the sharp price changes we saw following policy shifts in late 2023. A neutral strategy, such as a long straddle, which involves buying both a put and a call option, could benefit from substantial price movements in either direction. This approach assumes that the pair will not remain quiet after the announcement. Create your live VT Markets account and start trading now.

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