Key Events
• FOMC tone leaned cautious with 3 dissents and only one projected rate cut for 2026
• The $40B/month Treasury purchase plan added a dovish push, sending the DXY down toward 98.50
• USDJPY holds the 155 support, and USDCAD holds 1.3780 — will they follow the DXY lower?
The USD/JPY and USD/CAD pairs are holding key support levels following the dovish, fully priced-in 25 bps rate cut. Both pairs remain aligned with the FOMC’s cautious tone, with detailed levels discussed in my recent YouTube video: USDJPY, USDCAD FOMC Outlook — Razan Hilal, CMT (10/12/2025)
Before the FOMC meeting, both pairs were tracing bullish rebounds off their respective support zones — 155 for USDJPY and 1.38 for USDCAD. However, following the Treasury-liquidity announcement, coupled with Fed reelections risks in 2026 in favor of rate cut policies, both trends realigned back with these supports, which now appear fragile and exposed to another leg lower before any potential bullish reversal consistent with this year’s broader gains.
USDJPY Outlook: Daily Time Frame – Log Scale
Source: Trading view
Prior to the FOMC decision — and after a retest of the 155 support, which aligns with the upper bound of a channel respected since the April 2025 lows (an 8-month resistance turned into support) — USDJPY attempted a rebound. That move stalled below the 157.80 resistance before reversing sharply in a bearish engulfing pattern back toward 155 after the FOMC insights, returning the pair to a fragile holding pattern as the DXY sinks deeper below 98.80.
With key levels still intact, both scenarios remain valid:
Upside Scenario
• If the trend holds and price moves above 158, gains may extend toward all-time highs through 159 and 160, in alignment with the upper boundary of the duplicated channel.
Downside Scenario
• 154.80 remains the critical line separating bullish from bearish bias.
• A close below this level could extend downside pressure toward 153, 151.70, and the 150 psychological level.
USDCAD Outlook: Daily Time Frame – Log Scale
Source: Trading view
For USDCAD, the 1.38–1.3780 zone continues to hold as a key structural support, aligning with the 0.618 Fibonacci retracement of the June–November 2025 uptrend. The previously outlined scenarios remain in play:
Downside Scenario
• A clean break below 1.3780 may extend losses toward the bottom boundary of the duplicated channel at 1.37, where a rebound could later emerge.
Upside Scenario
• A sustained move back above 1.3970 — the neckline of the prior double-top pattern that triggered November’s decline — may realign the trend higher toward the mid-zone of the original channel at 1.4160, and eventually toward the upper boundary at 1.42, reinforcing the bullish bias originating from mid-year lows.
Written by Razan Hilal, CMT
Follow on X: @Rh_waves
