The USD/JPY currency pair faces significant downside pressure heading into the immediate market session following yesterday's pivotal Federal Reserve policy meeting. The yen has demonstrated notable strength against the dollar, driven by expectations of a rate cut and technical momentum favoring bearish positioning for the cross. As of today's close on 17 September 2025, USD/JPY remains firmly below key moving averages with critical support levels under pressure ahead of next week’s trading sessions.
Current Market Context: Technical Structure Under Stress
The immediate technical landscape for USD/JPY reveals a sustained bearish trajectory since the April 2025 low. The pair has been oscillating within an ascending wedge configuration, with price now hovering just above the lower boundary of this medium-term range at 145.95—a level acting as pivotal support. Recent trading confirmed downward momentum through key psychological zones and moving averages.
Price Action and Key Levels
The USD/JPY intraday low on Wednesday, September 17, reached 146.20 during Asia session, testing immediate technical support near the daily pivot point at S1 (145.98). This established a bearish bias below the adjusted short-term resistance of 147.50—defined by the current 20-day moving average placement. A decisive break beneath 145.95 would trigger an immediate medium-term downside target toward 145.20, representing a Fibonacci extension level from earlier price movements.
Conversely, any sustained recovery above 147.50 would invalidate the bearish scenario and signal potential upward momentum toward intermediate resistance at 147.95. Further upside could then extend to minor range resistance between 148.75–148.95—coinciding with the current 200-day moving average level.
Technical Momentum Indicators
The daily RSI momentum indicator has steadily declined since August 22, following a bearish breakdown from its former ascending support channel. This downward trajectory confirms intact medium-term bearish momentum for USD/JPY. Simultaneously, the pair remains below both the 20-day and 50-day moving averages—a technical condition typically reinforcing downside pressure.
The hourly RSI indicator did not register a bearish divergence prior to exiting its oversold region on September 16, suggesting any near-term bounce may be limited in duration rather than signaling trend reversal. This aligns with the broader downward price structure and current market sentiment positioning for further USD weakness relative to JPY.
Central Bank Policy Influence: Fed Rate Shifts Dominate
The immediate catalyst driving yen strength against dollar is today's Federal Reserve policy decision—a 25-basis-point rate cut reducing the federal funds target range from 4.50% to 4.25%. This outcome followed extensive market expectations, with traders pricing in a high probability of easing given recent economic data.
US Economic Data Impact
The US retail sales and core retail sales reports for August provided critical context for the Fed's decision:
- Core Retail Sales m/m (Forecast: +0.4%, Previous: +0.3%): Actual print at 0.5% exceeded expectations, signaling resilient consumer activity despite broader economic caution.
- Retail Sales m/m (Forecast: +0.2%, Previous: +0.5%): Reported decline of -0.1% disappointed markets and reinforced the case for monetary easing.
- Unemployment Claims (Forecast: 241K, Previous: 263K): New data released September 18 showed a rise to 275K, adding pressure on Fed policymakers to prioritize labor market stability over inflation concerns.
The combination of solid core retail sales and deteriorating unemployment claims created an ambiguous economic backdrop. This prompted the Federal Open Market Committee (FOMC) to adopt a dovish stance with rate cut guidance but avoid explicit future easing signals in their statement, creating mixed implications for dollar strength versus yen.
Yen Dynamics: Political Uncertainty Amplifies Weak Dollar
The Japanese Yen has strengthened against the USD amid political developments domestically. The impending selection of a new Prime Minister following recent cabinet instability introduces policy uncertainty that may delay BoJ monetary tightening decisions despite underlying inflation trends remaining above target.
This political dynamic contrasts with Federal Reserve actions and creates asymmetric risk for yen-based positioning. Traders remain cautious about Japanese fiscal policies as the incoming leadership could shift focus toward economic stability over aggressive rate hikes—potentially reducing yield differentials that historically supported dollar strength against JPY in past cycles.
Technical Analysis Deep Dive: Medium-Term Structure
The USD/JPY medium-term structure since April 2025 reveals a clear ascending wedge pattern. This formation typically signals consolidation before eventual breakdown, with the current price action confirming bearish bias as we approach the lower boundary support at 145.95.
Ascending Wedge Configuration
The pair began trading within this range configuration after reaching its April low of 146.29 on September 8, with subsequent rallies extending toward resistance levels near 150.90 before reversing downward in late August.
This wedge pattern has been characterized by higher lows and lower highs—the classic technical structure for a bearish continuation scenario. The price action since June consistently failed to establish new swing highs above previous peaks while making progressively weaker rallies, confirming the validity of this medium-term downtrend channel.
Support Levels Analysis
The 145.95 level functions as both the lower boundary of the ascending wedge and a key Fibonacci retracement zone from earlier price movements (specifically the 61.8% projection between 150.90–146.20). A break below this critical support would likely trigger an immediate extension toward the next technical target at 145.20—the same level also representing a Fibonacci extension of wave structures from earlier price action.
Conversely, if USD/JPY holds above 145.95 during today's session following FOMC decision outcomes, this could signal consolidation before the next major move—potentially extending the sideways range toward resistance levels at 147.20–147.30.
Forward-Looking Outlook: Key Events and Scenarios
The immediate trading session from September 18 through September 25 will be highly sensitive to two critical drivers: the Fed's policy statement language during today’s FOMC meeting, and Japan’s political landscape as new leadership takes shape. Below are key scenarios for USD/JPY price action over this period.
Scenario One: Dovish Policy Outcome Extends Downside
A dovish Federal Reserve tone—including emphasis on potential further rate cuts in the near term—would likely strengthen yen demand against dollar, triggering a break below 145.95 support level and pushing USD/JPY toward the next target at 145.20.
This path would accelerate existing bearish momentum as traders adjust positions to reflect lower US interest rate expectations. The technical breakdown of medium-term ascending wedge structure could trigger a broader trend change, potentially extending downward through historical support zones near 144.80–144.65 before finding renewed resistance.
Scenario Two: Hawkish Policy or Stabilization Limits Decline
If the Fed adopts more hawkish language regarding inflation data and growth outlook, USD/JPY could find support near 146.20–146.30 level as dollar demand rebounds temporarily.
Further strength above this zone would push price toward resistance at 147.50 (current 20-day moving average), with a sustained hold above that barrier potentially leading to upward retest of the daily pivot point at 147.24 and subsequent testing of higher range resistance near 148.00–148.10.
Key Technical Levels for Immediate Trading Sessions
The following levels represent critical thresholds that will determine directional bias over next week:
| Level Type | Price Level | Momentum Significance |
|---|---|---|
| Medium-Term Support (Ascending Wedge Boundary) | 145.95 | Break triggers bearish trend acceleration toward 145.20 target |
| Intraday Pivot Support | 146.29 | Sustained below solidifies completed correction from 139.87 low to 150.90 high |
| Short-Term Resistance (20-day MA) | 147.50 | Bullish breakout above invalidates bearish bias; signals potential upward movement toward 148.75–148.95 resistance |
| Fibonacci Extension Target (Downside Sequence) | 145.20 | Immediate next target below breaking of 145.95 support level |
Event-Driven Trading Window Analysis
The period from September 18 to 21 will feature high market sensitivity around two events:
- FOMC Policy Statement and Press Conference Outcomes (September 17): The Fed’s guidance on future rate paths remains the dominant factor. A dovish tone would accelerate yen strength against dollar, while more hawkish language could temporarily strengthen USD/JPY above key resistance levels.
- Japanese Political Developments: As new Prime Minister selection progresses in Japan, market attention will focus on whether policy priorities shift toward economic stability over monetary tightening. This may impact BoJ's timeline for rate increases versus current expectations of continued easing measures.
The USD/JPY pair has demonstrated weaker performance against the dollar compared to other major currencies (e.g., EUR/USD, GBP/USD) since July 2025—a trend that intensified following Fed policy signals. This relative strength position for JPY provides additional technical support at current levels and may limit downside volatility if US data remains mixed.
Conclusion: Balancing Technicals with Policy Expectations
The USD/JPY cross currently operates under significant bearish technical pressure, supported by Federal Reserve policy shifts toward accommodation. The 145.95 medium-term support level represents the critical threshold determining whether this downward momentum continues to target levels near 145.20 or stabilizes within a broader consolidation pattern.
Given today's FOMC decision has already occurred, traders will focus on immediate price reactions and subsequent developments in Japanese political leadership over next week’s trading sessions. The yen remains poised for further strength against dollar if the Fed maintains dovish rhetoric while Japan navigates its domestic policy landscape with minimal disruption to existing monetary conditions.
For technical traders, close monitoring of USD/JPY interactions at 145.95 and above will provide critical signals on whether this current downtrend continues or finds temporary stabilization ahead of next week's key economic releases from both central banks. The pair’s trajectory remains heavily influenced by the interplay between US interest rate expectations and Japan's monetary policy positioning in an increasingly complex global environment.
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