USD/JPY is at a point where it may test a recovery to the 158 range, while market attention is focused on the Bank of Japan's monetary policy meeting. The factors to watch tonight and going forward are reviewed below.
In the Tokyo market, USD/JPY lacked a clear direction, strengthening to around 158.06 early in the session before falling back to around 157.60. Downside was limited against a backdrop of elevated crude oil prices, and the pair recovered to the 157.90 range in the afternoon.
The Nikkei average rose for a third straight day, ending up ¥705.28 at ¥64,659.47. A sense of relief spread after the US FOMC, and TOPIX closed at 4,003.28.
Major indicators including the US September PCE deflator are due to be released tonight. Depending on the PCE result, USD/JPY may test the 158 range again. The advance GDP estimate and other factors will also be watched at the same time.
The forecast range for USD/JPY is 157.200–158.600, with around 157.60 viewed as downside support and the 158.00 range as upside resistance. Ahead of the Bank of Japan meeting, movement within the range is expected to be the focus.