The USD/JPY pair lacked clear direction during Tuesday's Asian trading session, fluctuating around 163.75. Market participants remained cautious ahead of the Federal Reserve's monetary policy meeting, temporarily reducing directional bets, resulting in a lack of significant driving factors for both the dollar and the yen. The US Dollar Index (DXY) has currently retreated slightly to around 101.46, entering a consolidation phase after a period of continuous gains. Investors are awaiting the Fed's latest policy decision to assess the future path of US interest rates and the medium-term trend of the dollar. According to market interest rate tools, traders expect a 62% probability that the Federal Reserve will maintain the current interest rate level, with the policy rate likely to remain in the 3.50%–3.75% range. Meanwhile, the market remains highly focused on the possibility of another rate adjustment in September. The biggest question in the market right now is how the Fed will assess inflationary pressures in the future. Although US inflation has declined from its previous high, it remains above the Fed's long-term target of 2%. The speed of the inflation decline and the Fed's assessment of future policy space will be the core factors influencing the dollar's movement. Investors generally believe that the Fed's statement this time may not provide overly specific guidance on future interest rates. Previously, Fed Chairman Kevin Warsh stated that traditional forward guidance may not be suitable in the current policy environment; therefore, the market is more focused on its statements regarding inflation risks, economic growth, and policy flexibility. At the same time, the yen is also facing the impact of an important policy event. The Bank of Japan will announce its monetary policy decision this Friday. The market expects the Bank of Japan to maintain its policy rate at around 1%, but at the same time release a hawkish signal, leaving room for further policy adjustments in the future. Changes in the Bank of Japan's policy stance are an important factor affecting the yen's movement. The yen's continued downward pressure over the past period has been primarily driven by the widening interest rate differential between the US and Japan. However, if the Bank of Japan further strengthens expectations of policy normalization, it could improve the yen's attractiveness and limit further gains in USD/JPY. Nevertheless, USD/JPY remains supported by the high-interest-rate environment in the US. The US-Japan interest rate differential remains the main factor maintaining USD/JPY's high level, while expectations of a policy shift by the Bank of Japan are a significant support for a potential yen rebound. The market is also focused on changes in global risk sentiment. Recent declines in energy prices and a de-escalation of some geopolitical risks have reduced market demand for safe-haven assets, weakening the yen's traditional safe-haven attributes. However, if risk events escalate again in the future, the yen may still attract capital inflows. From an overall market perspective, USD/JPY is currently in a pre-policy meeting waiting phase, with its short-term direction depending on policy signals from the Federal Reserve and the Bank of Japan. If the Federal Reserve releases hawkish signals while the Bank of Japan's stance falls short of expectations, USD/JPY may continue to test higher levels; conversely, if the Bank of Japan strengthens expectations of interest rate hikes, the yen may experience a recovery. From a daily chart perspective, USD/JPY has maintained an upward trend recently, trading around 163.75, with the overall trend still biased towards bullishness. The first resistance level to watch is around 164.50; a break above this level could lead to a further challenge of the psychological level of 165.00. Support is seen around 163.00, with further support at the 162.00 area. Technically, the pair is consolidating at higher levels; while the upward trend remains intact, short-term profit-taking pressure exists. On the 4-hour chart, USD/JPY has entered a sideways consolidation phase, with the price fluctuating between 163.50 and 164.00. A break above the 164.50 resistance level could lead to a continuation of the upward trend in the short term; a break below the 163.00 support level could result in a deeper correction. Technical indicators suggest that short-term momentum has weakened, and the market awaits confirmation from the Fed's decision and the Bank of Japan's policy signals for the next direction. The current USD/JPY exchange rate movement is primarily influenced by expectations regarding US and Japanese monetary policy. The expectation that the Federal Reserve will maintain high interest rates continues to support the US dollar, while the Bank of Japan's future policy normalization space provides potential upward momentum for the yen. In the short term, the Fed meeting will determine the direction of the dollar, while the Bank of Japan's policy statement will influence the yen's subsequent performance. If US inflationary pressures persist and the Fed maintains a hawkish stance, USD/JPY may continue to test higher levels; if the Bank of Japan signals stronger policy tightening, the exchange rate may face downward pressure. The current 163.00-165.00 area will be a key trading range for the market.