USD/JPY traded in the upper 153.00s this week and stayed inside its weekly range. Resistance remains near 154.00. Markets are waiting for the minutes from the latest US Federal Reserve meeting. The Fed left its benchmark rate unchanged at 3.5–3.75% and signalled a steady policy stance in the near term. The minutes may reveal disagreements within the committee after cooler US inflation and weak US jobs data last week.

Fed Minutes And Market Sensitivity

Chicago Fed President Austan Goolsbee said on Tuesday that if price pressures keep easing, the Fed could cut rates several times this year. In Japan, weak Q4 GDP data released on Monday renewed worries about the outlook. It also supported Prime Minister Sanae Takaichi’s plans for large-scale stimulus and lower taxes. The IMF warned that cutting the consumption tax could hurt public finances. It also called for more Bank of Japan tightening to keep inflation under control. This eased the yen’s upward momentum from last week and supported the US dollar. The Fed aims for stable prices and maximum employment. It uses interest rates to keep inflation near its 2% target. The Fed holds eight policy meetings each year, and the FOMC includes 12 officials. Quantitative easing boosts credit by buying high-quality bonds and usually weakens the dollar. Quantitative tightening slows or stops bond buying and is usually supportive for the dollar.

Range Bound Setup And Volatility Risk

With USD/JPY stuck in a tight range below 154.00, the main focus is the upcoming Fed minutes. The lack of direction can mean pressure is building. This makes options strategies such as buying a straddle appealing, since they can profit from a large move in either direction once the Fed’s internal debate becomes clearer. This is a classic volatility setup for the coming days. The case for US dollar weakness is starting to build, especially when looking back at last month’s data. The January 2026 Consumer Price Index (CPI) came in at 2.9%, slightly below forecasts. The jobs report also disappointed, showing only 155,000 new positions. This supports the more dovish view among some Fed officials and suggests futures markets may be underpricing the chance of rate cuts later this year. In Japan, the yen is getting mixed signals, which often leads to choppy trading. Japan’s economy contracted by 0.2% in the final quarter of 2025, making government stimulus more likely. Stimulus is typically negative for the yen. At the same time, international pressure is growing for the Bank of Japan to tighten policy, which would support the currency. Looking ahead, we may be near the start of a major policy split—the opposite of what we saw in 2024 and 2025. If the Fed keeps signalling rate cuts while the Bank of Japan moves toward tighter policy, the long-term trend in USD/JPY could shift lower. Derivative traders may want to watch for any more hawkish language from the Bank of Japan as a signal for a potential multi-month move. Create your live VT Markets account and start trading now.

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