USD Ranges as Japan Policy Shifts Drive JPY Currency Flows

The US dollar index consolidated near 104.50 as markets digested evolving Bank of Japan policy signals, creating significant movement in yen crosses. USD/JPY declined 0.8% to 148.20 as speculation grew regarding potential BoJ policy normalization, marking the pair's sharpest daily drop in three weeks. Japanese officials' comments suggesting readiness to adjust ultra-loose monetary settings sparked yen buying across the board. EUR/USD remained range-bound between 1.1680-1.1720, lacking clear directional catalyst amid mixed economic signals. The dollar's performance reflected balanced forces, with support from relatively hawkish Fed expectations offset by yen strength and global uncertainty. Technical analysis shows USD/JPY facing immediate support at 148.00, with a break potentially accelerating losses toward 147.50. Traders await Wednesday's FOMC minutes and Friday's US employment data for clearer dollar direction amid shifting global monetary dynamics.