USDJPY vulnerable as Fed decision looms, dollar weakness mounts

USDJPY faces a critical technical test as broad dollar vulnerability intensifies ahead of the Federal Reserve's policy decision. The pair has been under pressure as markets position for potential Fed dovishness, with traders closely monitoring key support levels that could determine the near-term direction. US Dollar Index futures have shown weakness, reflecting growing concerns about the Fed's policy trajectory amid mixed economic signals. The Japanese yen has found support from its safe-haven status and expectations that the Bank of Japan may continue its gradual policy normalization. Technical analysis reveals USDJPY approaching crucial support zones that have held throughout recent trading ranges. A break below these levels could accelerate yen strength and push the pair toward multi-month lows. Market participants await the Fed's statement and economic projections for clarity on the dollar's path, with any dovish surprise likely to pressure USDJPY further.