USD/JPY bearish outlook.

The USD/JPY reference rate fell 0.39% on 2026-09-21 to 157.27, retreating from the prior session's spike to 157.89 and settling back above the five-day average of 156.18. This pullback follows a sharp 1.76% five-day rally that lifted the pair well above its twenty-day average of 156.76, suggesting the recent dollar strength may be encountering near-term resistance. If the September 15-16 FOMC meeting delivered a hawkish hold or less dovish guidance than anticipated, the subsequent price action indicates markets may have already priced in that stance and are now positioning for potential yen stabilization.

What could change the view. The FOMC statement and projections from September 16 could contain hawkish elements that support further dollar gains, and the pair remains above both its five-day and twenty-day averages. A sustained break above 157.89 would invalidate the bearish thesis.