Yen Holds Firm as Currency Markets Weigh Japan’s Policy Shift and U.S. Outlook

The Japanese yen traded in a narrow range against the U.S. dollar as global currency markets returned to full activity after the long U.S. Presidents’ Day weekend. The dollar-yen pair hovered around the mid-153 level, reflecting a balance between renewed confidence in Japan’s economic direction and steady support for the U.S. currency.


Yen Strength Boosted by BoJ Rate Hopes

Trading remained cautious, with neither side showing enough momentum to trigger a decisive move. The yen drew strength from growing optimism that the Bank of Japan could adjust interest rates in the coming months, supported by Japan’s domestic policy agenda. Investors have responded by holding onto the currency amid global uncertainty.


U.S. Economic Data Provides Dollar Support

Recent U.S. economic readings helped stabilize the dollar without sparking a strong rally. Manufacturing activity remained steady, the labor market showed resilience, and inflation eased compared with late 2025. These developments suggest the Federal Reserve can proceed cautiously with monetary policy, keeping the dollar broadly supported.


Markets Await Clarity on Policy Moves


While markets still expect potential rate cuts later this year, confidence in rapid action has waned. Currency traders are now focused on upcoming Japanese inflation data and U.S. reports, which could provide fresh guidance on the timing of monetary shifts. Until then, USD/JPY is likely to remain in a defined range, balancing yen optimism and dollar stability.