Japanese Yen recedes as Fed and BoJ decisions loom

The Japanese Yen has seen a decline as investors anticipate decisions from the Federal Reserve and the Bank of Japan. The USD/JPY currency pair has risen to around 154.40, following a near 155.00 high earlier in the day. The market is focusing on a likely rate hike by the Federal Reserve on Wednesday, with odds of such an event surpassing 90%.

This expectation has led to a rise in US Treasury yields, particularly the 10-year, which hit its highest level in three years on Monday. The widening gap between US and Japanese interest rates attracts capital to the US Dollar, while higher oil prices bolster US inflation expectations and yields, further straining Japan's trade balance.

On the Japanese side, the Bank of Japan is set to meet on Friday, with a 25-basis-point hike anticipated. However, the Yen does not receive new buying support, allowing the US Dollar to lead. Technical analysis shows the USD/JPY at 154.38, with bullish bias above the 20-period Simple Moving Average (SMA) of 154.04 and the nearby horizontal floor at 153.99.

Resistance levels at 154.42, 154.58, and 155.00, along with the 100-period SMA at 157.12, act as potential ceiling for the pair's upward movement. On the downside, support is found at the 20-period SMA at 154.04 and the horizontal level at 153.99, with a drop below this range potentially weakening the bullish sentiment and exposing deeper corrective risks for the Yen.