USD/JPY slipped to about 158.70 in Asian trading on Wednesday, after rising the previous day. The move followed the release of the Bank of Japan’s January meeting minutes, which supported the yen. One member said higher interest rates could weigh on consumption, but wider effects on the financial system would likely stay contained. Policymakers agreed that real interest rates remain deeply negative, and that more rate rises would be appropriate if economic and inflation forecasts are met.

BoJ Minutes And Market Reaction

Most members favoured flexibility, with decisions taken meeting by meeting rather than at a set pace. Danske Bank said recent Japanese data have softened, with the Composite PMI falling and core CPI dropping below target for the first time in four years due largely to fuel subsidies. Danske Bank added that input costs remain high and the yen remains weak, and it expects the next BoJ rate rise in April. It said markets are pricing about a 50% probability. Brown Brothers Harriman said USD/JPY is trading sideways just under 159.00. It reported that headline and core inflation slowed in February, while underlying price pressures remain above the BoJ’s fiscal 2026 projections, and the April 28 meeting is in focus. Looking back at this time in 2025, we saw USD/JPY hovering near the 159.00 mark as markets were split on the Bank of Japan’s potential April rate hike. That period was defined by high uncertainty, with only a 50% probability priced in for a move. The BoJ did eventually deliver that small hike, which briefly strengthened the yen before the wide rate differential with the US took over again.

Positioning Ahead Of The April Meeting

Today, with USD/JPY trading near 152.50, the situation is different yet echoes the past. The US Federal Reserve has paused its easing cycle with its key rate at 4.50%, while the Bank of Japan, now at 0.25%, is the only major central bank with a clear tightening bias. This growing policy divergence is the central theme for the coming weeks. Recent data strengthens the case for another BoJ move at its upcoming April 28 meeting. This year’s spring wage negotiations have secured an average 4.5% increase, building on the historic 5.28% gains we saw in 2024. With national core inflation for February 2026 holding firm at 2.6%, pressure is mounting on the central bank to act. Traders should consider positioning for a potential drop in USD/JPY as we approach the policy decision. Buying JPY call options or USD put options with expirations in May offers a direct way to play this expected move. Implied volatility is likely to rise heading into the meeting, which would benefit those who own options. For those seeking a more measured approach, selling out-of-the-money USD/JPY call spreads could also be effective. This strategy profits if the pair stays below a certain level or falls, and it helps manage costs in a rising volatility environment. The key is to position for the yen holding its ground or strengthening, rather than weakening further from here. Create your live VT Markets account and start trading now.

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