While USD/JPY is expected to trade within a core range of ¥152–160 throughout the year, growing concern about yen depreciation among Japanese and US leaders and changes to the SNB’s policy wording are affecting cross-yen movements.
USD/JPY is expected to remain broadly within its previous range, with resistance in the ¥160 range and dip-buying likely near ¥152 on the downside. Since September, concern about yen depreciation has intensified following Japan-US summit meetings, increasing the likelihood that remarks at the leaders’ level will affect market trends.
In a report dated 25 September, Goldman Sachs sharply cut its previous forecast, lowering its 1-year USD/JPY forecast to the ¥150 range. While this is expected to cap the yen’s upside, cross-yen movements also warrant attention.
At its 24 September meeting, the SNB left its policy rate unchanged at 0%. Although it used wording indicating tolerance for a weaker Swiss franc, it gave no direct signal of an interest-rate hike, and the Swiss franc came under selling pressure against the yen. As a result, conditions in which upward pressure on the yen and downward pressure on it intersect are expected to continue.
With the Japan-US interest-rate differential not expected to narrow significantly, political factors are being closely watched as a key driver of USD/JPY. Market views are mixed, with concern about yen depreciation alongside cross-yen movements, and the trend could change depending on the results of the US FOMC and the Bank of Japan meeting at the end of October.