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USD/JPY remained in a narrow 80-pip trading range on Tuesday, closing near 159.62 after fluctuating between 158.96 and 159.79 across Asian and New York sessions. The pair showed minimal directional bias ahead of the Federal Reserve's policy decision and Japan's Tokyo CPI data release, which are critical for assessing monetary policy divergence between the US and Japan. Traders are closely monitoring these events to gauge potential shifts in yield differentials, which heavily influence the USD/JPY cross. The Fed's decision on interest rates and inflation data from Tokyo could trigger significant volatility, particularly if outcomes deviate from market expectations. For now, the pair remains range-bound, with key support near 158.96 and resistance at 159.79. Market participants will likely see increased activity after the Fed's statement and subsequent CPI data, which may provide clearer direction for the cross in the near term.
