{"id":81720,"date":"2025-12-09T21:16:42","date_gmt":"2025-12-09T10:16:42","guid":{"rendered":"https:\/\/www.icmarkets.com\/blog\/?p=81720"},"modified":"2025-12-09T21:16:43","modified_gmt":"2025-12-09T10:16:43","slug":"trade-usdjpy-on-the-fomc-interest-rate-decision-2","status":"publish","type":"post","link":"https:\/\/www.icmarkets.com\/blog\/trade-usdjpy-on-the-fomc-interest-rate-decision-2\/","title":{"rendered":"Trade USDJPY on the FOMC Interest Rate Decision"},"content":{"rendered":"\n<p>The Federal Open Market Committee\u2019s interest rate decision on Wednesday is shaping up as one of the biggest potential volatility events of the month, and USDJPY is front-and-centre for traders looking to position around interest rate differentials and forward guidance.<\/p>\n\n\n\n<p><br \/>Markets are now pricing an 89% probability of a 25 bp Fed rate cut, a sharp shift from just a few weeks ago when expectations were sitting closer to 30%. Importantly, the data hasn\u2019t meaningfully changed over that period. The repricing has instead come almost entirely from increasingly dovish commentary from Fed officials, crucially, some but not all, which has encouraged markets to lean heavily toward a cut.<\/p>\n\n\n\n<p>However, bond markets are sending a different signal. US yields have pushed higher over the past week, suggesting that fixed-income traders may be questioning the degree of dovishness implied by the Fed\u2019s rhetoric. This divergence sets the stage for potential volatility \u2013 and maybe even a rate hold??<\/p>\n\n\n\n<p>A rate cut is still the base case, so the key market-moving catalyst is likely to come from the Dot Plot, Rate Statement, and Powell\u2019s Press Conference.<\/p>\n\n\n\n<ul>\n<li>More dovish-than-expected guidance \u2192 USD likely to fall broadly.<\/li>\n\n\n\n<li>Less dovish tone (no one is expecting hikes) \u2192 USD could strengthen sharply.<\/li>\n<\/ul>\n\n\n\n<p><br \/>USDJPY is consolidating near key technical levels and is perfectly positioned for a breakout on either side depending on the Fed\u2019s tone.<\/p>\n\n\n\n<p>A more dovish Fed paired with a hawkish Bank of Japan backdrop would favour interest-rate-differential shorts \u2014 opening the door to a deeper downside correction. Conversely, a less dovish Fed could be the trigger for another drive higher, putting recent highs up near 158.00 back into play and making Yen levels once again uncomfortably for the Japanese monetary authorities.<\/p>\n\n\n\n<p>Key Technical Levels<\/p>\n\n\n\n<ul>\n<li>Resistance 2: 157.89 \u2013 November high &amp; trendline resistance<\/li>\n\n\n\n<li>Resistance 1: 156.20 \u2013 December high<\/li>\n\n\n\n<li>Support 1: 154.73 \u2013 Trendline support<\/li>\n\n\n\n<li>Support 2: 154.32 \u2013 December low<\/li>\n<\/ul>\n\n\n\n<p><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><a href=\"https:\/\/www.icmarkets.com.au\/blog\/wp-content\/uploads\/2025\/12\/USDJPY-Daily.png\"><img decoding=\"async\" src=\"https:\/\/www.icmarkets.com.au\/blog\/wp-content\/uploads\/2025\/12\/USDJPY-Daily.png\" alt=\"\" class=\"wp-image-76323\"\/><\/a><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<p>The accuracy, completeness and timeliness of the information contained on this site cannot be guaranteed. IC does not warranty, guarantee or make any representations, or assume any liability regarding financial results based on the use of the information in the site.<\/p>\n\n\n\n<p>News, views, opinions, recommendations and other information obtained from sources outside of www.icmarkets.com, used in this site are believed to be reliable, but we cannot guarantee their accuracy or completeness. All such information is subject to change at any time without notice. IC assumes no responsibility for the content of any linked site.<\/p>\n\n\n\n<p>The fact that such links may exist does not indicate approval or endorsement of any material contained on any linked site. IC is not liable for any harm caused by the transmission, through accessing the services or information on this site, of a computer virus, or other computer code or programming device that might be used to access, delete, damage, disable, disrupt or otherwise impede in any manner, the operation of the site or of any user\u2019s software, hardware, data or property.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Federal Open Market Committee\u2019s interest rate decision on Wednesday is [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":78318,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[462],"tags":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/posts\/81720"}],"collection":[{"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/comments?post=81720"}],"version-history":[{"count":1,"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/posts\/81720\/revisions"}],"predecessor-version":[{"id":81721,"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/posts\/81720\/revisions\/81721"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/media\/78318"}],"wp:attachment":[{"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/media?parent=81720"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/categories?post=81720"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.icmarkets.com\/blog\/wp-json\/wp\/v2\/tags?post=81720"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}