US Dollar Jumps on Hawkish FOMC Minutes – USD/JPY Near Breakout Zone
By Matt Simpson, Market Analyst
Date: 18/02/2026
Summary
The US dollar experienced significant strength following the release of hawkish minutes from the Federal Open Market Committee (FOMC), which reignited speculation regarding potential rate hikes. Several FOMC officials indicated that further tightening of monetary policy may be necessary if inflation remains high, leading to a reassessment of the Federal Reserve's policy trajectory.
Market Reactions
As a result of the hawkish sentiment, the US dollar surged, particularly against the Japanese yen, which saw USD/JPY rise nearly 1% to a six-day high. Conversely, the euro and Australian dollar faced downward pressure, with EUR/USD dropping to an eight-day low and AUD/USD closing below 0.71. The New Zealand dollar also suffered, falling 1.3% after the Reserve Bank of New Zealand (RBNZ) held interest rates steady, dampening expectations for imminent rate hikes.
Bond Yields and Stock Market Impact
US bond yields increased, with the 2-year yield reaching 3.47% and the 10-year yield climbing to 4.087%. The stock market reacted by paring earlier gains, with the S&P 500 and Nasdaq initially rising over 1% before retreating from their daily highs.
Commodities and Geopolitical Tensions
In the commodities market, gold rebounded from previous losses, while silver saw a notable increase of over 5%. WTI crude oil also rallied from a key support level around $62 amidst rising geopolitical tensions involving Iran.
Technical Analysis of the US Dollar Index (DXY)
Despite a general outlook of a weaker US dollar for the year, short-term risks appear skewed to the upside. The DXY has formed a bullish candle, indicating a false break below the 96 level. Resistance is anticipated around the 97.77–98.00 range, which includes previous swing highs and lows, as well as the 20- and 50-day moving averages. A breakout above this zone could lead to further declines for major FX peers.
Futures Positioning Insights
Recent positioning in the US dollar futures market shows traders were net-short by $20.5 billion, the most bearish stance since June. However, large speculators are nearing a potential shift to net-long positions, which could indicate a reversal in sentiment if US economic data continues to improve.
USD/JPY Technical Outlook
The bullish momentum for USD/JPY is supported by the pair closing above December highs and approaching a target near the monthly pivot point at 155.43. However, a significant high at 159.45 formed in January suggests that the Japanese yen may regain strength over time, with potential for a move back towards 150.00 if a swing high is established.