On Monday, the Japanese yen remained in a range-bound trading range for over a month, lacking direction against the US dollar. Market sentiment was mixed. On the one hand, uncertainty about the Bank of Japan's rate hike pace was holding back yen bulls.

On the other hand, the Federal Reserve is almost certain to cut interest rates this week, which will continue to suppress the US dollar and provide some support for the Japanese yen.

From a policy comparison perspective, investors generally believe that the Bank of Japan will continue its normalization process, while the Federal Reserve is priced by the market as a more aggressive easing path. This has caused the US dollar to hover at a low level against the yen and continue to weaken.

In addition, domestic factors in Japan are also influencing market sentiment: the resignation of Prime Minister Shigeru Ishiba this month has increased uncertainty about the policy outlook and may prompt the Bank of Japan to delay its next interest rate hike.

An upward revision to second-quarter GDP, a tight job market and the first rise in real wages in seven months strengthened the case for another Bank of Japan interest rate hike this year.

Geopolitical tensions also provided safe-haven support for the yen, with the United States and the Group of Seven calling for further sanctions on Russia and Ukraine escalating its attacks on Russian energy facilities.

At the same time, tensions in the Middle East have escalated, with Iranian lawmakers calling on Qatar to expel US troops and deploy missiles to deal with regional threats. These news have supported the safe-haven properties of the Japanese yen to a certain extent.

Market commentators pointed out: "Before the results of the FOMC and Bank of Japan meetings were released, most traders chose to wait and see, waiting for policy signals before making any moves."

USD/JPY has been trading in a rectangular range for the past few weeks, reflecting market uncertainty. A sustained break below the 147.00 level would confirm a negative trend, targeting the 146.20 support area. Further declines could include testing the 145.35 and 145.00 psychological levels.

If the rebound breaks through the resistance of 148.00 and rises to the 200-day moving average of 148.75, it is expected to reach the 149.00 range, reversing the short-term bearish pattern.

Overall, the technical structure favors a bearish outlook and a break below 147.00 will strengthen downward momentum.

Editor's Note: The USD/JPY pair is at a critical inflection point. Expectations of a Fed rate cut combined with Japanese economic data supporting a rate hike are creating downward pressure on the exchange rate over the medium term. However, if the Fed signals caution this week and the Bank of Japan adopts a more dovish stance, short-term range-bound trading is likely. Focus on the 147.00 level, which will determine the direction of the market over the next one to two weeks.