USD/JPY is expected to trade in a ¥156.40–¥159.20 range next week, with the balance potentially disrupted depending on the US CPI release and the performance of AI-related stocks.
The outlook for USD/JPY next week places the range at ¥156.40–¥159.20 and the core range at ¥157.25–¥158.75, with attention focused on the possibility that the US CPI release and the performance of AI-related stocks could disrupt this equilibrium. The dollar is expected to be influenced by US interest rates and stock price movements, while expectations for a BOJ rate hike are also likely to affect the yen.
A stronger-than-expected US CPI reading would support expectations for additional rate hikes and could see USD/JPY test the upper ¥158 range. Conversely, if an AI stock sell-off causes expectations for US rate hikes to recede, gains in the dollar would be constrained, with the direction depending on the reactions of stock prices and US interest rates.
Regarding the AI stock sell-off and the BOJ's policy direction, expectations for a BOJ rate hike could support the yen, while a continued decline in stock prices could strengthen the factors supporting yen buying. Technically, a break above ¥158.65–¥158.76 would become the next upside target, while a break below ¥157.25–¥157.40 is expected to open further downside.
Key events next week include the BOJ's Summary of Opinions, the US CPI release and CoreWeave's earnings, and these announcements could affect the battle within the range and the outlook for monetary policy.