Today's outlook is that USD/JPY is expected to continue trading in the 157 range. Although short-term fluctuations may occur depending on US economic data, the pair is expected to remain in a range centered on the 157 level.
In yesterday's market, USD/JPY continued to trade in the 157 range. While the stance of Japanese and US authorities to restrain yen depreciation capped the upside, expectations of a widening US-Japan interest rate differential led to mixed dollar buying and yen selling. Under these conditions, movement centered on the 157 range is still expected.
The September US PCE price index is seen as a key focus going forward. It is expected to potentially strengthen dollar-buying pressure through expectations of US rate hikes. The impact of the ADP employment report and JOLTS is expected to be limited unless they deviate significantly from expectations, and the view is that marked changes are unlikely.
Movements in EUR/USD and GBP/USD, as well as cross-yen exchange rates, may move in tandem with USD/JPY, but the current view is that fluctuations around the 157 range will remain contained.
Overall, the prevailing expectation is that USD/JPY will continue to trade in the 157 range. A resumption of yen carry trades is seen as a potential buying catalyst on dips.
The possibility of a short-term range breakout remains depending on developments in the specific indicators discussed in the article, but no major changes are currently expected.