【The dollar/yen pair cannot be reassured even around 159 yen; the next focus is how to factor in “after the April hold”】

【USD/JPY cannot rest at around 159 yen; next focus is how to incorporate “post-April hold”】

In the current currency market, USD/JPY remains near the high end, but it has entered a phase where simply viewing it as a straightforward yen depreciation trend is difficult. The market’s biggest focus is next week’sApril 27–28 Bank of Japan Monetary Policy Meeting. The Bank of Japan is currently applying the deflationary facilities rate at **0.75%**, and the schedule for the next meeting has already been announced. Nevertheless, recent Reuters reports suggest that the BOJ is likely to refrain from additional rate hikes at the April meeting and to keep policy unchanged. The background includes energy-price pressures and economic uncertainty stemming from the prolonged Middle East situation, which makes it hard to hurry monetary tightening.

However, what matters here is not that “no action in April automatically means the yen will weaken unidirectionally.” According to Reuters, even if the BOJ skips a rate hike in April, the market still perceives thatthe possibility of a June rate hike remains. Furthermore, the IMF also suggests that inflation pushed up by the Iran conflict is likely temporary, and that the BOJ can continue a gradual rate-hiking path while monitoring data.the gradual rate-hike path can continue. In other words, the market’s attention has shifted from “when will they move now” to a time horizon about “when will they move next.”

On the other hand, the BOJ itself is wary of the Middle East situation affecting the financial system over the long term. The Financial System Report published on April 21 notes that Japan’s financial system is broadly stable, but geopolitical risks could lead tohigher energy prices, increased funding costs, and strained corporate financingif they persist. This is not irrelevant to the currency market. As the yen weakens, import prices rise, and if economic uncertainty grows, the BOJ’s rate-hike decision becomes even more challenging, so USD/JPY faces both upside and downside pressures.

From the U.S. side, the dollar is not in a environment conducive to heavy selling. In the March 18 statement, the Fed noted thatinflation remains somewhat high and the economic outlook is uncertain, and that the impact of the Middle East situation on the U.S. economy is unclear. The minutes released on April 8 also stressed similar uncertainties. In short, the U.S. is not easily shifting toward a dove, and from the perspective of the U.S.-Japan interest-rate differential, the dollar/yen remains supported.

In this environment, individual investors should focus less on “direction” and more on “which data are driving the market.” In the run-up to and just after the BOJ meeting, the market may react more sensitively to changes in the governor’s remarks and outlook than to the mere holding. If Middle East tensions or crude oil price movements change, USD/JPY could swing even at high levels. For now, rather than rushing to chase highs, it may be important to limit attention to time zones with larger price ranges such as early London or early New York, and assess the sustainability of the news.