USD/JPY has been consolidating for some time, remaining below ¥159. However, Japan's consumer price index (CPI) report on 23 October and the Bank of Japan's interest-rate decision on 30 October could bring the sideways trading phase to an end.
Japan's headline and core CPI are both expected to rise to 2.1% year on year, from 1.9% and 1.7%, respectively. The release comes just one week before the Bank of Japan's policy announcement. Markets are not pricing in a rate hike at this meeting, but a hotter-than-expected report could change those expectations. An in-line reading could be enough to keep pressure on the central bank to maintain its hawkish message, strengthening the case for a December hike.
The technical picture, however, points to the possibility of further yen weakness, which would mean USD/JPY moving higher. Weaker-than-expected CPI or a more dovish-than-expected Bank of Japan could support that scenario. The pair appears to be forming a cup-and-handle pattern, a bullish continuation setup that could pave the way for a return towards previous highs near ¥164.
USD/JPY daily, September 2025 – present
Source: TradingView, 21 October 2026
The pattern could fail. Instead of breaking above ¥159, USD/JPY could slip below trendline support near ¥157.75. In that scenario, the first likely support level would be around ¥155.25, an important area since March 2026.
