USD/JPY Analysis: Yen Weakens Ahead of Fed Decision and US Data

The USD/JPY pair continues its upward trajectory for a third consecutive trading session, recovering from last week's October low near the 156.00 level. However, bullish momentum remains somewhat cautious as market participants position themselves ahead of major central bank events and key macroeconomic releases from the United States.

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The U.S. dollar continues to attract steady demand amid growing market expectations that the Federal Reserve will maintain a relatively hawkish policy stance. Elevated energy prices have kept inflation concerns intact, supporting the greenback across major currency pairs.

Key Central Bank Events and Macro Data

Market focus is centered on Wednesday's Federal Reserve policy decision. Traders will closely examine the accompanying monetary policy statement and Federal Reserve Chair Jerome Powell's press conference for signals regarding future interest rate trajectories.

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Following the Fed decision, market attention will shift to Thursday's release of the advance U.S. Q3 Gross Domestic Product (GDP) estimate and the Personal Consumption Expenditures (PCE) price index. These releases will provide crucial insight into economic growth and underlying inflation, further shaping expectations for Fed monetary policy.

Yen Outlook and Technical Levels

Meanwhile, the Japanese yen remains under pressure due to expectations that the Bank of Japan will refrain from aggressive monetary policy tightening. This policy stance continues to support carry-trade strategies, keeping the yen broadly subdued against the dollar.

From a technical perspective, USD/JPY's broader momentum remains contained while trading below the 200-period exponential moving average (EMA). Immediate downside support is provided by the 50-day simple moving average (SMA), followed by the key psychological level at 157.00.

On the upside, initial dynamic resistance is located at the 20-day SMA. A decisive breakout above this barrier would open the way toward stronger resistance at the 200-day SMA, where a sustained clearance would ease broader bearish pressure and support further upside potential.

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