Investors are showing caution as the US Federal Reserve and Bank of Japan (BoJ) policy decisions approach, causing the USDJPY currency pair to stay close to its annual highs at 147.791.

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• USD/JPY remains near yearly highs as investors turn cautious ahead of the US Federal Reserve and Bank of Japan (BoJ) policy decisions.

The pair currently trades last at 147.791.

The previous day high was 147.88 while the previous day low was 147.56. The daily 38.2% Fib levels comes at 147.68, expected to provide support. Similarly, the daily 61.8% fib level is at 147.76, expected to provide support.

The USD/JPY remains subdued as Tuesday’s session begins, ahead of the US Federal Reserve’s decision on Wednesday, in which the US central bank is expected to keep rates unchanged at the 5.25%-5.50% range. The major is rising on the advancement in US Treasury bond yields and trades at 147.71, at around yearly highs.

Investors’ sentiment has turned sour ahead of the Fed. Besides the monetary policy decision, Fed Chair Jerome Powell and Co. will update their economic forecasts and Federal Funds Rate (FFR) expectancy. The last Summary of Economic Projections (SEP) witnessed policymakers expecting a 1% economic growth while the unemployment rate would climb to 4.1%. The Fed’s preferred inflation gauge, the PCE, is estimated at 3.2%, and the core PCE at 3.9%. The same report projects the FFR to peak at around 5.60%.

In the meantime, the Bank of Japan (BoJ) will also reveal its decision on September 22, in which the BoJ is not expected to raise rates. Still, it would be interesting to see if there are some expressions about additional tweaking to its Yield Curve Control (YCC) and discussions about ending its negative interest rates program.

Data-wise, August’s US building permits rose above estimates, and housing starts tumbled the most since 2020, down at -11.3%. On the Japanese front, its docket would feature the Balance of Trade for August, estimated at ¥-659.1B, while Exports are foreseen to shrink by -1.7%.

Consolidation is the name of the game with the USD/JPY pair. The threat of intervention by Japanese authorities refrains investors from opening fresh long bets in the pair, which could have easily tested the 150.00 threshold if not for the abovementioned. Initial resistance for the USD/JPY is seen at 148.00 before climbing towards the October 31 daily high at 148.84. A downward correction wil face the Tenkan-Sen at 146.92, followed by the Kijun-Sen at 146.19.

Technical Levels: Supports and Resistances

USDJPY currently trading at 147.76 at the time of writing. Pair opened at 147.61 and is trading with a change of 0.1 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 146.72, 50 SMA 144.0, 100 SMA @ 141.92 and 200 SMA @ 137.4.

The previous day high was 147.88 while the previous day low was 147.56. The daily 38.2% Fib levels comes at 147.68, expected to provide support. Similarly, the daily 61.8% fib level is at 147.76, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 147.48, 147.36, 147.16
• Pivot resistance is noted at 147.8, 148.0, 148.12

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