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USD/JPY holds near 163.80 ahead of Fed decision

Markets are assigning about a 33.7% chance to a 25 basis point hike, keeping positioning cautious ahead of the 18:00 GMT policy announcement.

Reported · Written up by our desk · Major Pairs

USD/JPY was trading around 163.80 on Wednesday, virtually unchanged on the day, as investors stayed cautious ahead of the Federal Reserve's monetary policy decision due later in the session, according to FXStreet.

The pair remains near recent peaks after touching a multi-decade high of 163.99 earlier this month. The Fed is widely expected to hold its benchmark rate steady in the 3.5% to 3.75% range, but CME FedWatch pricing implies a 25 basis point hike probability of about 33.7%.

Traders will also watch for guidance from Fed Chair Kevin Warsh after the decision, with the policy announcement set for 18:00 GMT and the press conference at 18:30 GMT. FXStreet said even a rate hold could keep the US dollar supported if the tone is hawkish, while a dovish surprise could spark a sharp downside move for the Greenback against the Japanese yen.

FXStreet also pointed to a supportive geopolitical backdrop for the US dollar, with heightened US-Iran tensions after attacks targeting US positions in Jordan, alongside higher oil prices that keep inflation concerns elevated. It added that, given markets are entering the meeting with a relatively hawkish bias, the main risk for USD may be an aggressive unwind if expectations shift.

Latest closeUSD/JPY 163.85 ▲0.1%

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