Recent Fed and Bank of Japan policy shifts dominate USD/JPY pricing, with the Fed lifting its target range to 3.75-4.00% in mid-September and signaling further tightening while the BoJ raised its policy rate to 1.25%—its highest in over three decades—yet delivered mixed guidance that limited yen support. Two-year yield spreads and front-end rate differentials continue to favor the dollar, though Japanese intervention totaling nearly $99 billion earlier this summer and renewed rate-check risks near 158-160 have capped upside. Traders are monitoring upcoming inflation prints, labor data, and central bank communications for shifts in the implied rate path, as energy prices and U.S. Treasury yields add volatility to the pair’s 2026 trajectory.