Selling USDJPY down to 150.00

Given yesterday’s pile of macroeconomic data, combined with the outcome of the Federal Reserve’s (Fed) meeting, the medium-term outlook for USDJPY points to a moderate decline, interrupted by short consolidation periods.

The yen’s strengthening is likely to be driven by a narrowing rate gap between the Fed and the Bank of Japan (BoJ).

So, what did the September meeting bring us? Borrowing costs in the United States rose by 0.25% to 4.00%. However, the dot plot is not particularly hawkish, signaling gradual monetary easing ahead. To be more specific, interest rates are expected to reach 4.1% in the third quarter (Q3), hold at this level for the next year, and then slide to 3.9% a year later.

Long-term neutral borrowing costs sit at 3.2%. This trend suggests that the US central bank is leaning toward a dovish future, depriving the dollar of its key advantage in recent years—impressive yields. Meanwhile, the BoJ is slowly but surely moving away from negative and zero rate policies, phasing out its Yield Curve Control (YCC) program. The narrower the gap between US and Japanese bond returns gets, the less appealing carry trades become. Investors are now closing their positions, increasing the yen’s liquidity.

We’ve covered the long-term picture, but what about the near future? The publication of the FOMC minutes and the upcoming press conference have already delivered a bearish impulse to the dollar. Over the next few weeks, USDJPY is likely to test nearby local support levels. Major investors could soon begin taking profits, contributing to the formation of a steady downward channel next year. The baseline scenario suggests systematic selling during rebounds, with the yen gradually strengthening as the Fed’s easing cycle unfolds.

The overall recommendation is to sell USDJPY. Profits should be taken at 150.00. Stop Loss could be set at 160.40.

The volume of the open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.