Dollar-yen remains firm ahead of the FOMC and BOJ meeting, but the finance minister's remarks cautioning against yen depreciation are expected to cap gains. Earnings announcements from major technology companies are also cited as a direct market catalyst.
Dollar-yen has remained firm, but its next move will depend on major events beginning today. The dollar is supported by a rebound in US equities and fiscal and political uncertainty in Europe, but the market is at a juncture where it must determine whether this represents a long-term dollar-buying trend or a temporary correction.
This week's events include the FOMC, which begins today. While markets have largely priced in an unchanged policy rate, the BOJ Monetary Policy Meeting is scheduled for 29-30. In addition, earnings announcements from Alphabet, Microsoft and Amazon are due, and movements in AI-related stocks could determine the direction of US equities.
Following comments by Finance Minister Katayama (片山), some observers say that the view that the yen is not undervalued was also shared at the Japan-US summit meeting. As a result, dollar-yen moves driven by further yen selling are expected to be contained.
The expected trading range for dollar-yen is around ¥158.54-158.60 on the upside, seen as a resistance zone, with ¥157.38 to ¥156.65 cited as the downside range. US economic data will focus mainly on housing, while the market is widely expected to react only modestly to the September PCE deflator and 9-3Q GDP.