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Source: Newsmaker.id
The USD/JPY pair traded around 157.05 on Thursday (October 22), as the US dollar faced continued pressure against the yen. This decline comes as investors trim their dollar positions ahead of a series of critical monetary policy decisions due next week. The yen strengthened after previously trading within a narrow range near the 158 level. Reuters
In the United States, the dollar is under pressure as the market increasingly anticipates that the Federal Reserve will hold interest rates steady at its October meeting. Weakness in AI-related stocks and a decline in Treasury yields have further diminished the dollar's appeal, though the Fed’s generally hawkish stance keeps the potential downside for USD/JPY limited. Reuters
Meanwhile, the yen is finding support from growing interest in Japanese domestic assets. Japanese investors have been selling foreign bonds for five consecutive weeks, as rising domestic yields make Japanese bonds increasingly attractive. This shift in capital flows could help alleviate selling pressure on the yen. Reuters
Regarding the Bank of Japan (BoJ), the market is awaiting clarity on the timing of the next interest rate hike. BoJ officials have previously noted that Japan’s underlying inflation is nearing the 2% target, and that delaying policy adjustments could pose risks to the economy. However, there are no clear signals yet that the BoJ will raise rates in the near term. MUFG Research
Market attention is now focused on the Federal Reserve meeting on October 28, followed by the BoJ meeting on October 29–30. The divergence in policy paths between the two central banks will be a key factor for USD/JPY, especially since the interest rate differential between the US and Japan remains a primary driver for the pair. TMG Masia
Newsmaker Analysis: USD/JPY is currently facing pressure from a weakening dollar and increased support for the yen; however, the pair retains a foundation for resilience, as the interest rate gap between the US and Japan remains wide. If the Fed signals a more dovish stance while the BoJ opens the door to an interest rate hike, the downward pressure on USD/JPY could potentially intensify. (asd)
Source: Newsmaker.id