Japan’s Trade Minister, Ryosei Akazawa, said he discussed projects in Japan’s US-focused investment package with US Commerce Secretary Howard Lutnick. He said work is moving forward and that he wants to speed up talks on the first group of projects.
Akazawa also pushed measures to increase exports of Japanese farm products, including Japanese beef. He added that both sides discussed possible joint projects to diversify supply chains for critical minerals.
Investment Package Talks Update
He said talks on the investment package have moved forward, but the two sides are still some way from an agreement. He said negotiations have been difficult, and he could not say when the first projects would be finalised.
He said he plans to strengthen Japan–US economic ties ahead of Sanae Takaichi’s planned visit to the United States. At the time of writing, USD/JPY was around 153.25, up 0.38% on the day.
The latest meeting shows progress on the investment package. However, Akazawa’s comments that talks are difficult and have no clear end date point to ongoing uncertainty. That helps explain why USD/JPY has stayed firm near 153.25. In our view, this news alone is unlikely to reverse the yen’s underlying weakness.
The main driver remains the large interest rate gap between the US and Japan. The US Federal Reserve held its key rate at 3.25% at its January 2026 meeting, while the Bank of Japan has kept its policy rate close to 0.1%. This gap, which has widened since early 2025, continues to make the US dollar more attractive than the yen. The trade talks matter, but they are a secondary factor compared with this policy divide.
USDJPY Range And Volatility
Looking back at the sharp interventions in 2025, Japan’s Ministry of Finance has shown it is uncomfortable with the yen weakening beyond 155. With USD/JPY now near 153.25, that history creates a psychological ceiling for the market. Because of this, range-based options strategies may be worth considering, such as selling strangles with strikes placed well outside the recent trading range.
Implied volatility in USD/JPY has been falling. One-month options now price an expected move of about 8.2% annualised, down from the higher levels seen last year. The unclear timeline for the trade talks suggests this low-volatility setting may continue in the near term. That can make longer-dated options relatively inexpensive for positioning for a possible breakout later in the year if a deal is suddenly announced.
Beyond FX, it may also be worth watching derivatives linked to the Nikkei 225. A completed investment deal could support Japanese exporters and firms tied to critical minerals, which were part of the discussions. Buying call options on Nikkei futures could be one way to gain upside exposure to the talks without taking direct exposure to potentially volatile currency moves.
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