The US is expected to maintain its current monetary policy, while markets are likely to curb their moves ahead of policy decisions in Japan and Europe. Strong consumer confidence and elevated long-term yields driven by AI-related funding demand are supporting dollar buying, but USD/JPY is expected to remain heavy around ¥158.
In European and US FX markets on the 28th, USD/JPY is expected to struggle to rise. The US is likely to maintain its current monetary policy, but if it maintains its tightening stance, dollar buying could continue. With policy decisions by the European Central Bank and the Bank of Japan approaching, aggressive moves are unlikely. The US consumer confidence index released the previous day was stronger than expected, supporting expectations of further tightening.
US long-term yields remained elevated on funding demand related to artificial intelligence development, supporting dollar buying. EUR/USD weakened into the $1.1130s as selling of the euro intensified amid fiscal and social uncertainty in France. After USD/JPY approached ¥158, selling emerged around ¥158 in today's Asian session, highlighting resistance to further gains.
Attention will remain focused on US monetary policy in overseas markets later today. While an FOMC decision to leave policy rates unchanged is already priced in, a hawkish message could prompt dollar buying, supported by rising long-term yields. USD/JPY is likely to face selling in the ¥158 range amid caution over coordinated intervention by Japan and the US, and gains are expected to remain difficult. Attention will also focus on developments at the ECB Governing Council meeting and the Bank of Japan's Monetary Policy Meeting, but for now, a wait-and-see mood ahead of those decisions could curb market activity.