The US dollar rose slightly against the Japanese yen (USD/JPY) in Asian trading on Thursday, currently trading around 163.50. The dollar regained buying interest following signals from the Federal Reserve's policy, while the yen was influenced by expectations of the Bank of Japan's policy and market concerns about intervention risks, resulting in an overall tug-of-war between bulls and bears. The Federal Reserve kept interest rates unchanged at its July monetary policy meeting, maintaining the target range for the federal funds rate at 3.50%-3.75%, in line with market expectations. However, the hawkish signals released at the meeting became a significant driver of the dollar's rise. The decision was not entirely unanimous; three Fed officials supported a 25 basis point rate hike, indicating that the committee remained vigilant about the impact of inflationary pressures and rising energy prices. This increased market expectations for further policy tightening, providing short-term support for the dollar. Fed Chairman Kevin Warsh stated that the Fed would not reveal its future policy direction in advance, but would take necessary measures to achieve its 2% inflation target. This statement reinforced market expectations that the Fed might maintain a restrictive interest rate environment. Meanwhile, renewed tensions in the Middle East also increased demand for the dollar as a safe haven. Market news indicated that investors increased their allocation to safe-haven assets such as the dollar following the escalation of related military conflicts. While the yen traditionally possesses safe-haven attributes during periods of deteriorating risk sentiment, the significant interest rate differential between Japan and the US provided some support for the USD/JPY exchange rate. However, further upside potential for USD/JPY is influenced by expectations regarding the Bank of Japan's policy. The market expects the Bank of Japan (BOJ) to keep its policy rate unchanged at its July meeting, currently around 1.0%. However, investors are more focused on whether the BOJ will signal further rate hikes in the future. Analysts at MUFG Morgan Stanley Securities stated that the BOJ may continue to view inflation risks as skewed to the upside. If inflationary pressures exceed expectations, or if continued yen depreciation increases policy pressure, a rate hike could be brought forward to September or October. Market strategists also point out that even if the BOJ maintains its current rate, a hawkish policy communication could strengthen market expectations for further tightening of monetary policy, thereby pushing the yen higher. Currently, the market is focusing on changes in the monetary policy divergence between the US and Japan. In the US, the market is assessing whether the Federal Reserve will maintain high interest rates at future meetings; in Japan, attention is focused on wage growth, inflation performance, and whether yen depreciation pressure will prompt the central bank to take more aggressive action. If the BOJ releases a clearer tightening signal, and US economic data shows signs of cooling, the expected US-Japan interest rate differential may narrow, and USD/JPY may face downward pressure. Conversely, if the US dollar remains strong and safe-haven demand continues to rise, the exchange rate may still challenge higher levels. From a daily chart perspective, USD/JPY is currently maintaining a high-level consolidation with a slightly bullish bias, trading around 163.50, with bulls still in control in the short term. The first resistance level to watch is 164.00; a successful break above this level could lead to a further test of the 165.00 area. On the downside, 162.50 provides short-term support; a break below this level could lead to a pullback to the 161.50-160.80 area. Current market momentum remains biased towards the US dollar, but changes in expectations regarding Japanese yen policy could increase the risk of a pullback. From a 4-hour chart perspective, USD/JPY maintains an upward trend with short-term moving averages showing a bullish bias, but the pace of increase has slowed. Technical indicators show that buying momentum has diverged as the price approaches higher levels. If the exchange rate breaks through the 163.80-164.00 area, the short-term upward trend may continue; if it encounters resistance and falls back below 162.50, a technical correction may be triggered. Future price movements will largely depend on the Bank of Japan's policy statements, changes in US Treasury yields, and the flow of safe-haven funds. The USD/JPY pair is currently influenced by both hawkish signals from the Federal Reserve and policy expectations from the Bank of Japan. The Fed's maintenance of high interest rates and its warnings about inflation have kept the dollar strong in the short term; however, if the Bank of Japan signals further rate hikes in its interest rate decision, it could change market expectations for the yen's performance. The core issue for USD/JPY in the future remains the change in the USD/JPY interest rate differential. If the US economy remains resilient and the Fed maintains its tightening stance, USD/JPY may continue to test higher levels; however, if the Bank of Japan strengthens expectations of policy normalization, coupled with increased pressure on the yen to depreciate, the exchange rate may experience a significant pullback. Overall, USD/JPY remains relatively strong in the short term, but the upside potential around the 163-164 area needs careful observation. Investors should pay close attention to policy signals from the Bank of Japan and changes in global risk sentiment.