Japanese Yen faces its moment of truth ahead of Fed decision

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USD/JPY remains close to multi-decade highs ahead of the US monetary policy decision.
Investors are waiting for the Fed's statement and press conference to reassess interest rate expectations.
Geopolitical tensions and higher Oil prices continue to fuel inflation concerns.

USD/JPY trades around 163.80 on Wednesday at the time of writing, virtually unchanged on the day, as investors remain cautious ahead of the Federal Reserve's (Fed) monetary policy decision, which is due later in the day. After reaching a multi-decade high of 163.99 earlier this month, the pair continues to trade near those levels, with market participants avoiding major positions before the US central bank's announcement.

The Fed is widely expected to keep its benchmark interest rate unchanged within the 3.5%-3.75% range. However, markets continue to price in the possibility of a 25-basis-point rate hike. According to the CME FedWatch Tool, the chance currently stands at around 33.7%, an unusually high level just hours before the policy decision.

Beyond the decision itself, investors will closely monitor comments from Fed Chair Kevin Warsh for further guidance on the path of monetary policy in the coming months. Even if the central bank leaves rates unchanged, a hawkish tone could continue to support the US Dollar (USD).

However, with markets entering the meeting with a relatively hawkish bias, the main risk for the US Dollar may actually lie in a dovish surprise. While currently viewed as the less likely outcome, any signs that the Fed is becoming more comfortable with the inflation outlook could trigger a sharp downside correction in the Greenback, particularly against the Japanese Yen (JPY), with USD/JPY trading near multi-decade highs and leaving the pair vulnerable to an aggressive positioning unwind.

In the meantime, the geopolitical backdrop also remains supportive for the USD. Tensions between the United States (US) and Iran have escalated after attacks targeting US positions in Jordan, with US President Donald Trump pledging further military strikes in response. Meanwhile, higher Oil prices continue to raise inflation concerns, reinforcing the case for a restrictive monetary policy stance.

The Fed will announce its policy decision at 18:00 GMT, followed by Fed Chair Kevin Warsh's press conference at 18:30 GMT.

Japanese Yen Price Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.02%	-0.06%	-0.02%	-0.14%	0.52%	0.21%	-0.02%
EUR	0.02%		-0.03%	0.02%	-0.12%	0.56%	0.22%	0.01%
GBP	0.06%	0.03%		0.07%	-0.08%	0.59%	0.26%	0.04%
JPY	0.02%	-0.02%	-0.07%		-0.12%	0.55%	0.19%	-0.01%
CAD	0.14%	0.12%	0.08%	0.12%		0.67%	0.33%	0.12%
AUD	-0.52%	-0.56%	-0.59%	-0.55%	-0.67%		-0.32%	-0.53%
NZD	-0.21%	-0.22%	-0.26%	-0.19%	-0.33%	0.32%		-0.21%
CHF	0.02%	-0.01%	-0.04%	0.01%	-0.12%	0.53%	0.21%

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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

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