Will the BoJ deliver the expected hold on Friday after the Yen surrenders half its gain?

• A close above 157.50 sees USD/JPY recover roughly half its losses over two sessions.
• An October BoJ rate increase is not expected by any economist polled by Bloomberg.
• Wednesday's Fed statement precedes both Tokyo CPI and the BoJ policy decision.

USD/JPY recovered roughly half its losses from 22 and 23 October on Monday, closing near the session high two days ahead of the Fed's decision. Earlier Yen buying in Tokyo had pushed the pair below 157.00 to its weakest level since 18 September. Monday's rebound took it from just above 156.50 to just above 157.50.

A BoJ rate increase is not expected to provide a trading catalyst for the Yen on Friday. After the Bank of Japan (BoJ) lifted its rate from 1% to 1.25% in September, BoJ Governor Ueda said consecutive hikes were unnecessary. A further increase on Friday would amount to back-to-back hikes following September's move. Of the economists surveyed by Bloomberg, none forecasts an October increase, while most anticipate one in December.

While September's 7-2 vote included two dissents opposing a rate increase, previews suggest any dissent on Friday will instead favour a hike, coming from BoJ board members Takata and Tamura. A vote supporting an increase could bring forward the December hike that Yen traders are awaiting.

Which releases could shape the next move?

The final data ahead of Friday's BoJ decision arrive at 23:30 GMT on Thursday: Tokyo's October Consumer Price Index (CPI) and Japan's September unemployment rate. At 06:30 GMT on Friday, BoJ Governor Ueda will hold his subsequent press conference. His guidance on December remains the Tokyo policy signal for USD/JPY to price in.

At 18:00 GMT Wednesday, the Fed is due to release its statement and is expected to leave its 3.75%-4.00% range unchanged. Attention then turns to US third-quarter growth and September's Personal Consumption Expenditures Price Index (PCE), both scheduled for 12:30 GMT Thursday. The two releases will inform the case for a December Fed rate increase.

What do the charts indicate?

Both the 200-day Exponential Moving Average (EMA) and the 50-day average sit just below 158.00, beyond Monday's session high. The decline on 22 October marked the first daily close under 157.00 since 18 September. Across six months, the chart's range extends from the 8 September low just below 153.00 to July's high just below 164.00.

Daily price chart: USD/JPY