USD/JPY slides to near 146.20 ahead of Fed’s monetary policy outcome

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USD/JPY slides to near 146.20 ahead of Fed’s monetary policy outcome

USD/JPY extends its downside to near 146.20 as the US Dollar remains under pressure ahead of the Fed’s policy.
The Fed is nearly certain to cut interest rates.
Investors await Japan’s National CPI and BoJ’s monetary policy announcement.

The USD/JPY pair falls further to near 146.20 in the European trading session on Wednesday. The pair faces selling pressure as the US Dollar (USD) trades cautiously ahead of the Federal Reserve’s (Fed) monetary policy announcement at 18:00 GMT.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, holds onto Tuesday’s losses near 96.60.

The US Dollar has remained on the back foot for the past few weeks as traders have been increasingly confident that the Fed will cut interest rates. According to the CME FedWatch tool, traders see a 96% chance that the Fed will reduce interest rates by 25 basis points (bps) to 4.00%-4.25%, while the rest support a bigger reduction of 50 bps.

US Dollar Price Last 7 Days

The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the weakest against the Swiss Franc.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-1.06%	-0.85%	-0.66%	-0.63%	-1.15%	-0.77%	-1.35%
EUR	1.06%		0.21%	0.35%	0.42%	-0.14%	0.29%	-0.28%
GBP	0.85%	-0.21%		0.16%	0.23%	-0.34%	0.08%	-0.46%
JPY	0.66%	-0.35%	-0.16%		0.12%	-0.54%	-0.10%	-0.38%
CAD	0.63%	-0.42%	-0.23%	-0.12%		-0.57%	-0.16%	-0.68%
AUD	1.15%	0.14%	0.34%	0.54%	0.57%		0.43%	-0.12%
NZD	0.77%	-0.29%	-0.08%	0.10%	0.16%	-0.43%		-0.38%
CHF	1.35%	0.28%	0.46%	0.38%	0.68%	0.12%	0.38%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Fed dovish bets are intensified by mounting United States (US) labor market risks in the wake of tariffs imposed by President Donald Trump.

The Nonfarm Payrolls (NFP) benchmark revision report for 12 months ending March 2025 showed earlier this month that employers created 919k fewer jobs than had been anticipated earlier.

This week, the major trigger for the Japanese Yen (JPY) will be the release of the National Consumer Price Index (CPI) data for August and the Bank of Japan’s (BoJ) monetary policy announcement on Friday. Investors expect the BoJ to hold interest rates steady at 0.5%.

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).