[USD/JPY around 159 yen is hard to judge in one direction, what matters now is the “shelf life of the ingredients”]

【USD/JPY is hard to judge direction even near 159; what matters now is the “shelf life of the news”】

In the current FX market, USD/JPY remainsaround the high 159s, but the market’s picture is changing a bit. According to Reuters, as of April 22, amid ongoing Middle East tensions, the dollar tends to be bought, but hopes for a ceasefire and alertness mix together, making the whole market prone to “watchful waiting.” Major central banks are not expected to move significantly soon; rather, a cautious stance to assess the situation first is viewed as prevailing.

Regarding the Bank of Japan, the meeting on April 27–28is likely to keep rates unchanged. The backdrop is vigilance about the impact of prolonged Middle East tensions on energy prices and corporate sentiment. However, the possibility of rate hikes has not disappeared, and the market still holdsthe expectation of a June rate hike. In fact, Governor Ueda did not strongly hint at a April rate hike, and the market’s early expectations for tightening have receded significantly, but further action remains possible depending on upcoming data.

On the other hand, in the United States, the FOMC statement on March 18 indicated thatinflation remains somewhat high and economic outlook uncertainty remains large. In such a situation, the U.S. side is not easily inclined toward a markedly dovish stance, so the spread between U.S. and Japan rates continues to support USD/JPY.

For individual investors, what to be mindful of now is“whether prices go up or down” is less important than how long the drivers last. If Middle East risk is priced in, dollar buying tends to rise; conversely, if tension eases becomes more widespread, dollar strength may ease. Furthermore, as the BOJ meeting nears, policy headlines are also prone to fluctuation. Rather than chasing the high level, it seems more prudent to focus on periods with higher price movement such as the London morning or New York morning, monitor the durability of the news, and respond accordingly to maintain feasible trading.