NextFin news, The USD/JPY currency pair experienced heightened volatility in the week ending Friday, September 19, 2025, closing at 147.958 after fluctuating between a low of 145.481 and a high of 148.284. This movement reflects growing divergence between the US Federal Reserve's tightening stance and the Bank of Japan's (BoJ) continued ultra-loose monetary policy.
On September 19, the BoJ announced plans to begin offloading its $250 billion holdings in exchange-traded funds (ETFs) and Japanese Real Estate Investment Trusts (JREITs), signaling a shift from its ultra-loose monetary policy. Despite maintaining interest rates at 0.5%, a 7-2 vote split within the BoJ fueled speculation about a near-term rate hike, influencing USD/JPY movements.
Looking ahead, key Japanese economic indicators such as the services Purchasing Managers' Index (PMI) scheduled for Wednesday, September 24, and Tokyo inflation data due on Friday, September 26, are expected to be pivotal. Economists forecast the services PMI to rise slightly from 53.1 in August to 53.4 in September, which could indicate increased momentum in Japan's services sector, accounting for over 70% of GDP. Rising employment and price trends within this sector may support a hawkish BoJ stance and potential rate hikes.
Tokyo's annual inflation rate is anticipated to increase from 2.6% in August to 2.9% in September, with core-core inflation expected to reach 3.3%. A higher inflation reading could accelerate BoJ's monetary policy normalization, potentially strengthening the yen. Conversely, lower inflation figures might delay rate hikes until later in the year, weighing on yen demand.
In the United States, several critical economic data releases and Federal Reserve speeches are scheduled this week, including the services PMI on September 23, initial jobless claims and GDP figures on September 25, and the core Personal Consumption Expenditures (PCE) price index on September 26. These data points will influence the Fed's policy path and the US dollar's strength.
Fed Chair Jerome Powell is set to speak on Tuesday, September 23, with additional Federal Open Market Committee (FOMC) members also delivering remarks. Strong US economic data or hawkish Fed rhetoric could drive USD/JPY toward 150, while weaker data or dovish signals might push the pair toward 145.
Technically, USD/JPY trades above its 50-day and 200-day exponential moving averages (EMAs), suggesting a bullish bias. A breakout above the recent high of 148.284 could lead to testing resistance at 149.358 and potentially the August 1 high of 150.917. On the downside, a break below the 200-day EMA could expose support at 145.
Overall, the USD/JPY exchange rate's near-term direction hinges on the interplay between US economic data, Fed speeches, and Japanese inflation and PMI figures, reflecting the contrasting monetary policy outlooks of the Federal Reserve and the Bank of Japan.
Source: FXEmpire, "Japanese Yen Weekly Forecast: USD/JPY Price Action Hinges on Fed Speeches and US Data," published September 21, 2025, https://www.fxempire.com/forecasts/article/japanese-yen-weekly-forecast-usd-jpy-price-action-hinges-on-fed-speeches-and-us-data-1549826
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