USD/JPY is expected to remain in a tug-of-war around ¥156 this week. With the BOJ meeting and FOMC ahead, the focus will be on whether the pair moves toward a recovery to the 157s or a break below ¥156.
USD/JPY fell to the low 156s last week but has been slow to extend its decline, supported by the resilience of US economic data. Even after a rebound in long-term US interest rates, the pair has not established itself in the 157s.
This week is expected to bring a concentration of events, including the US FOMC, earnings announcements from major US technology companies and the BOJ monetary policy meeting. Whether the US 10-year Treasury yield returns to the 5% range could prove a turning point for the currency pair.
At the BOJ meeting, the Outlook Report and Governor Ueda's comments will be the focus. The key factors will be whether growing expectations of a rate hike in December sustain yen buying, or whether a cautious stance prompts investors to unwind yen-buying positions.
On a daily basis, USD/JPY has remained below the close of 156.826 yen and near the weekly moving average. In the short term, the focus will be on whether it can recover the weekly pivot near 157.17 yen and the 157.90 yen level.