USD/JPY is expected to experience periods of decline into the ¥156 range next week, including a drop to around ¥156.08 and a recovery to around ¥157.13. Depending on developments at the FOMC and the BOJ, the pair may remain within a ¥156-159 range.
In the Tokyo market, USD/JPY fell into the ¥156 range, declining to around ¥156.08 early in the session before briefly recovering to around ¥157.13, driven by higher crude oil prices.
Japan’s September CPI rose 2.1% year on year, while core CPI also rose 2.1% and core-core CPI increased to 2.4%. The increases are believed to have been driven by higher accommodation and water charges, as well as the pass-through of energy and other costs.
The FOMC and the BOJ’s Monetary Policy Meeting are scheduled for next week. While the market widely expects both to leave interest rates unchanged, the possibility of a rate hike in December is expected to be the focus. Depending on the BOJ’s Outlook Report and Governor Ueda (植田)’s stance, these developments could also affect the yen market.
Technically, USD/JPY is facing resistance from the 200-day moving average, while the psychological level around ¥158 is also in focus. The ¥156 area, representing a 50% retracement, is a downside reference point, and if that level is broken, the ¥155 psychological level could become the focus of the battle.