The Battle for 155: Hawkish FOMC minutes fuel USD/JPY breakout hopes

• The primary driver for the USD/JPY climb was the Federal Reserve's cautious stance on rate cuts, which boosted the US Dollar.
• A massive surge in Japanese exports (16.8% YoY) failed to lift the Yen due to the widening policy gap with the Fed.
• The pair is at a critical technical juncture, with a sustained close above the 155.00 resistance level needed for the move to continue.

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USD/JPY experienced a dynamic trading session characterized by a renewed surge in US Dollar strength following hawkish signals from the Federal Reserve post the FOMC minutes (for more on this read January FOMC Minutes and Wartime – North American Mid-Week Market update).

Japanese economic data showed a massive surge in exports, the Yen remained largely on the defensive.

USD/JPY climbed approximately 0.80% during the session, trading near the 154.50 mark.

Earlier in the day, the pair showed signs of consolidation, holding near its mid-Bollinger Band on the daily charts as volatility appeared to fade.

However, the release of the FOMC Meeting Minutes acted as a catalyst for a potential breakout, pushing the pair toward key resistance zones.

Hawkish FOMC Minutes: The primary driver for the late-session jump was the Federal Reserve’s January meeting minutes. The report indicated a cautious approach to rate cuts, with policymakers emphasizing the need for more evidence of cooling inflation.

This prompted traders to scale back expectations for near-term easing, boosting US Treasury yields and the Dollar.

Japanese Export Surge: Japan released provisional trade data for January 2026, showing a massive 16.8% year-on-year increase in exports, the largest jump since late 2022. Exports to Asia and Europe were particularly strong (up over 25%).

Despite this positive fundamental data, the Yen’s reaction was muted as the market focused more on the widening policy gap between the Fed and the Bank of Japan (BoJ).

Japan-US Investment Ties: News broke regarding Japan’s plan to invest up to $36 billion in US oil, gas, and mineral projects. This is part of a larger $550 billion commitment under a trade pact with the US.

While these ties strengthen long-term economic relations, the immediate capital flow implications contributed to a stable-to-stronger Dollar.

The technical landscape for USD/JPY remains a "battle of the levels":

The Bull Case: A decisive push above the 155.00 psychological level could open the door for a run toward the 158.00 level.

The daily candle close with little upside work suggests that bullish momentum is strong. However, for confirmation the RSI needs to break above the 50 level which would hint at a shift to bullish momentum and could facilitate a move higher.

A break above the 155.00 handle may run into a problem at the 50-day MA which rests at the 155.99 handle.

The Bear Case: Some market analysts maintain a broader bearish bias, suggesting that the current rally is merely a retracement of the massive sell-off seen in January (which peaked at 159.45).

If the pair fails to close above the swing high at 157.66, the overall trend remains bearish in nature and this bullish rally may run out of steam.

For now though the US dollar may play a crucial role in where the pair heads to next.

USD/JPY Daily Chart, February 18, 2026

Looking forward, the USD/JPY trajectory will likely be dictated by upcoming US labor market data and further commentary from BoJ officials.

While Japan's trade resilience is a long-term positive for the Yen, the "higher-for-longer" narrative from the Federal Reserve remains the dominant force keeping the pair in a high-altitude breakout zone.

Traders should watch for a sustained close above 155.00 to confirm if this rally has the legs to retest year-to-date highs.

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