【Dollar/Yen is not “safe to buy” even in the high price range; what to watch now is the mood after the Bank of Japan meeting】

【Dollar/Yen in the high price range is not safe to buy just because of the high level; what to watch now is the sentiment after the BOJ meeting】

In the current foreign exchange market, the dollar/yuan is still at a level that keeps the high-price range in mind, but the market has entered a phase where it is hard for trends to move in one direction. The biggest focus isthe BOJ Monetary Policy Meeting on April 27–28. Reuters reports that the Bank of Japan is likely to keep the policy rate at0.75%. The background includes energy concerns from prolonged Middle East tensions and uncertainty about the economy, making an additional rate hike difficult to rush. That said, even with this hold,the market believes a June rate hike remains possible, and market focus is shifting from "will there be movement in April" to "when will there be movement next."

On the other hand, Japan’s inflation trends pose a challenge for the BOJ. Japan’s core CPI for March rose1.8% year on yearexpecting higher prices one year from now. In other words, although the current figures look calm, future inflation pressure has not completely disappeared.

The U.S. side is also not in an environment where selling the dollar all at once would be easy. In the March 18 statement, the Fed saidinflation remains somewhat high and there is considerable uncertainty about the economic outlook, and the impact of Middle East tensions on the U.S. economy remains unclear. The next FOMC isApril 28–29, scheduled right after the BOJ meeting, creating a situation where U.S. monetary policy events loom shortly after. With both the U.S. and Japan environments not conducive to immediate, large directional shifts, the interest-rate differential continues to support the dollar/yen.

In this environment, the point for individual investors to focus on isnot so much whether the BOJ will hold, but how hawkish the post-meeting message will be. In the high-price range for USD/JPY, a little change in factors can quickly bring about rapid gains or declines. For now, rather than chasing new highs, it seems prudent to focus on time slots with higher volatility such as early London or early New York session, and carefully observe how the market absorbs the policy event after it occurs, which is more likely to lead to a sensible trading outcome.