USD/JPY found support near 155.35 on Wednesday after pulling back from a two-week high set the day before. It traded around 155.75, almost unchanged on the day, after rising over the past week.
After the Fed struck a hawkish tone, the US Dollar still saw fresh selling. Traders were worried about new trade-policy disruptions linked to US President Donald Trump. Geopolitical risks also lifted demand for safe-haven assets like the Japanese Yen, which added pressure on USD/JPY during the session.
Japan Policy Signals And Yen Dynamics
Reports said Japan’s Prime Minister Sanae Takaichi voiced concerns about further rate hikes in a meeting last week with BoJ Governor Kazuo Ueda. Japan also nominated two reflationists to the BoJ board. This lowered expectations for faster rate increases and helped limit JPY strength.
Repeated rebounds from the 200-day EMA breakout area, followed by a move higher, suggest the technical tone is improving. The MACD is above its signal line and back in positive territory, while the RSI sits near 54.
Resistance stands at 156.90, then 158.40, with 160.00 above that. Support is at 155.00, then 153.50, and 152.70 near the 200-day EMA.
In late 2025, we highlighted a constructive setup, and the bullish USD/JPY case played out as expected. The pair broke above the 156.00 and 158.40 resistance levels we tracked and later peaked just above 160.00 in December 2025. After a healthy pullback, USD/JPY is now consolidating near 157.80, which may offer a fresh entry area.
Policy Divergence And Trade Volatility
The key driver remains the wide gap between central bank policies, which has grown even larger. US inflation for January 2026 came in at a firm 3.2%, keeping the Federal Reserve hawkish at its latest meeting. In contrast, Japan’s national CPI last month was only 2.1%, allowing the Bank of Japan to signal that any tightening will be very gradual.
This gap in policy continues to limit meaningful Japanese Yen strength. In late 2025 data, Japan’s Tankan survey for large manufacturers showed weaker business sentiment, supporting the BoJ’s cautious stance. This softer backdrop for the yen can help support long USD/JPY positions.
For derivatives traders, this setup favors strategies that benefit from a slow grind higher or limited downside. Consider buying call options with strikes around 159.00 and 160.00, with expirations in April or May 2026. This targets a possible retest of prior highs while capping risk to the premium paid.
Still, US trade-policy headlines can spark sharp volatility, as we saw last year. Surprise tariff news could trigger a rush to safety and a quick, temporary drop in USD/JPY. To help manage this risk, a small position in out-of-the-money puts can work as a hedge against bullish exposure.
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