Ahead of the Bank of Japan's monetary policy meeting, USD/JPY is expected to trade within a ¥154.800–¥157.500 range. The prevailing view is that today's policy rate announcement and the pace of future rate hikes will determine the yen's direction, making whether Governor Ueda signals a hawkish stance the key focus.
USD/JPY fell by approximately 0.2% yesterday on a closing-price basis. The pair at one point slipped to the mid-¥155 range against a backdrop of lower crude oil prices and falling U.S. long-term interest rates, but expectations for a weaker yen returned after the FOMC indicated a 25bp rate hike. The Bank of Japan is scheduled to announce its policy rate at its monetary policy meeting later today, with the market viewing a 25bp hike as almost certain.
The focus now shifts to whether the Bank of Japan will signal an additional rate hike later this year and to its outlook for the pace of future hikes. With debate continuing between dovish and hawkish positions, whether Governor Ueda should signal a hawkish stance is expected to be a major turning point for the yen. The Bank of Japan's outlook could also be affected by the direction of policy following the U.S. FOMC meeting.
The latest USD/JPY charts and other market information are available in the Gaitame.com Report, and this morning's forecast presents a ¥154.800–¥157.500 range. The degree of movement within the range could change depending on the content of upcoming announcements.