USD/JPY tests critical 100-day MA at 146.17 ahead of Fed decision

USD/JPY is trading at 146.20, hovering just above the crucial 100-day moving average at 146.175 as markets await the Federal Reserve's rate decision at 2 PM ET. The pair has declined 0.8% this week, pressured by expectations of a Fed rate cut that could narrow the US-Japan yield differential. Market positioning shows traders are split between a 25 or 50 basis point cut, creating heightened volatility. Technical indicators suggest the 100-day MA represents a critical support level - a break below could accelerate selling toward 145.50 (50-day MA), while holding above maintains the upward trend intact. The Bank of Japan's continued accommodative stance provides some support for USD/JPY, but dollar weakness remains the dominant factor. Traders should watch for increased volatility around the Fed announcement, with the size of the rate cut likely determining whether the pair breaks support or rebounds toward 147.00 resistance.