USD/JPY is expected to trade next week with the monetary policy meetings of Japan and the United States approaching, while September US CPI is likely to be the main focus. The euro is expected to remain under pressure amid concerns over French public finances and political uncertainty.
USD/JPY is expected to trade next week with the monetary policy meetings of Japan and the United States approaching, while markets assess key US economic indicators, fiscal risks and geopolitical risks. Market attention is focused on September CPI as an input into the FOMC's decision.
September US CPI is expected to rise 3.6% year on year, in line with the market forecast. The range of movement could widen depending on the sluggish growth in the August PCE deflator and September employment conditions. Some expect long-term interest rate trends to drive USD/JPY.
The size of the budget deficit and concerns over fiscal policy could also drive USD/JPY, with the fiscal 2026 deficit expected to exceed $2 trillion. Concerns over fiscal discipline could at times push up long-term interest rates.
France's fiscal problems and political uncertainty are keeping the euro under pressure, and the French government's proposals are expected to face a high hurdle in parliament. Uncertainty over developments in Europe could also affect EUR/JPY.