USD/JPY stabilized above the daily Ichimoku cloud top at 153.88 on Monday, recovering slightly after dropping to a six-week low of 153.72 on haven demand fueled by weakness in U.S. tech stocks. The yen benefited from its safe-haven status, but gains were capped by cautious sentiment ahead of this week’s Fed meeting and key U.S. economic data. Meanwhile, unwinding of long positions from December’s Fed meeting has added to USD/JPY’s muted rebound, while the pair’s broader uptrend remains under pressure.

Technical indicators suggest USD/JPY remains range-bound. Support at 153.88, reinforced by the Ichimoku cloud top, has held so far, with additional downside protection at the 153.72 low. Resistance is seen at the 55-day moving average at 154.96, followed by the January 23 high of 156.76. A break below 153.72 could trigger further declines, while a move above 154.96 would signal renewed bullish momentum. The slow stochastics indicate potential for further swings, but market participants are awaiting clarity from key data releases before committing to directional trades.

This week’s events will shape USD/JPY’s near-term outlook. The Fed’s decision on Wednesday, along with U.S. GDP, PCE, and jobless claims data, will determine whether the dollar’s strength persists. A dovish Fed tone could weigh on USD/JPY, but any declines are likely to be orderly if risk sentiment improves. In Japan, services PPI and Tokyo CPI will provide insights into inflation dynamics, potentially shifting expectations for a BOJ rate hike. Until these catalysts emerge, USD/JPY is expected to remain anchored near its current range, with bulls needing a break above 154.96 to regain control.