USD/JPY climbs toward 156.60 amid a strong US Dollar and dovish FOMC guidance.
USD/JPY Nears 156.60 as US Dollar Index Hits Weekly High
The USD/JPY currency pair surged to near 156.60 during late Wednesday’s Asian trading session, supported by a stronger US Dollar following the release of the Federal Open Market Committee (FOMC) minutes.
USD/JPY Approaches 156.60 Amid Strong Dollar
The pair gained 0.2% as the US Dollar attracted buying interest, despite FOMC minutes showing that officials still favor a gradual move toward neutral policy to support the US labor market. The minutes noted:
“Most participants noted moving toward a more neutral policy stance would help forestall possible job market deterioration.”
Analysts say that the Fed’s careful balancing of rate cuts and economic support continues to boost the Greenback against major currencies. According to the CME FedWatch tool, further rate cuts of at least 50 basis points are expected in 2026.
Fed’s Policy Moves and Impact on Currency Markets
Despite reducing interest rates by 75 basis points to 3.50%-3.75% in 2025, the Fed remains cautious about potential risks to employment. Investors are closely watching how these moves will influence currency pairs, including USD/JPY, in the coming months.
Why Traders Are Watching the Japanese Yen
The Japanese Yen (JPY) faces selling pressure as the Bank of Japan (BoJ) is unlikely to tighten policy soon. Government support for fiscal spending continues, and BoJ officials indicate that interest rate adjustments may occur only if corporate pay and wage growth improve.
US Dollar Index Hits Weekly High
The US Dollar Index (DXY) rose to near 98.30, its highest level in a week. The DXY strength is reinforcing USD/JPY momentum, signaling that the pair may continue rising in the short term.
What’s Next for USD/JPY
Traders should monitor upcoming economic releases, including US employment data and Japanese economic indicators. Global risk sentiment and trading volumes will also affect the near-term volatility of USD/JPY.
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