The dollar-yen is expected to remain firm as buying returns after the sharp decline in AI-related stocks, but with key events including the FOMC, ECB and Bank of Japan meetings scheduled this week, further upside chasing is likely to be cautious.
Risk aversion in the market has eased as the rebound in AI-related stocks after their sharp decline has paused and the momentum in higher crude oil prices has also weakened. Against a pause in the yen's appreciation, the dollar-yen is expected to continue trading firmly.
This week, the US Federal Open Market Committee (FOMC), the Governing Council of the European Central Bank and the Bank of Japan's Monetary Policy Meeting are scheduled, while the UK's Autumn Budget and the preliminary US third-quarter GDP reading are also attracting attention. Around these events, both upside and downside moves are expected to remain limited.
The dollar-yen is expected to trade relatively calmly around the ¥157 range from here. Meanwhile, the euro's recovery has been sluggish despite easing fiscal concerns, and selling on rallies is expected to continue, centered around the upper ¥1.11 range.
The euro-yen is expected to continue moving sideways around ¥176.00, while cross-yen pairs are likely to lack a clear direction in a dollar-led market. A pause in the decline in stocks will provide support, but upside will remain limited as euro selling against the dollar weighs on the pair. The pound-dollar is also facing a heavy upside, and active trading has been restrained ahead of the UK government's Autumn Budget announcement.