【Dollar/Yen moves to a “watchful phase,” the current market is at the stage of looking for a “reason for movement”】

【Dollar/Yen entering a “watchful waiting” phase; the current market is in a stage where it is searching for a “reason to move”】

The current dollar/yen exchange rate remains in the high range, but the strong trend feel that existed before has somewhat faded. It is not collapsing sharply, nor is it steadily moving in one direction with force—the market now has a very strong air of “waiting for the next catalyst.”

In recent months, dollar/yen has been a backdrop of high U.S. interest rates and the U.S.-Japan rate differential, where dip-buying has been very effective. Recently, however, even when it rises it stalls, and when it falls it is bought back quickly, resulting in price action that lacks clear direction.

Underlying this is a continued caution about intervention by Japanese authorities in the currency market. The 160 yen level remains strongly in focus, and the view persists that “intervention to buy yen could occur again at this price range.” As a result, aggressive chasing of the highs is becoming harder.

On the other hand, the dollar itself remains solid. Inflation is easing in the U.S., but the Fed remains cautious about rapid rate cuts. Consequently, U.S. rates are unlikely to fall sharply, and as a result, the downside for dollar/yen tends to remain limited.

In short, the current dollar/yen is a market where “strong catalysts” and “cautionary factors” collide, often leading to range-bound movements.

Furthermore, geopolitical tensions in the Middle East and fluctuations in crude oil prices are unsettling market sentiment. If crude oil prices rise, import costs for Japan increase, making yen selling a more likely factor. Conversely, as geopolitical risks intensify, there can be demand for the yen as a safe-haven, making the market difficult to read.

Additionally, market expectations for the Bank of Japan are in a delicate balance. While policy rates remain unchanged, the speculation about “when the next rate hike will be” persists. However, given economic impact and overseas risks, a sharp tightening of financial conditions is unlikely.

This blend of “expectation” and “cautious stance” creates an overall market state of indecision.

In such an environment, individual investors should focus on this: **“don’t try to force a directional call.”**

Recently, the dollar/yen has moved a lot temporarily but often reverses soon after, making “breakout chasing” trades more difficult than before.

Especially in the early hours of the London and New York sessions, there are many cases where it seems to move in one direction before reversing, increasing the frequency of “false moves.” Now more than ever, it is crucial to ask “why is it moving?” rather than simply “enter because it moved.”

For example, observe reactions after major indicators, verify the market’s sustainability after key officials’ comments, and consider not only the short-term charts but the longer-term trend as well—these basic aspects tend to translate into meaningful differences in outcomes.

The current dollar/yen is characterized more by a spread of “uncertainty” across the market than by a clear sense of direction. Therefore, now is a time to calmly assess the reasons behind moves rather than trying to predict which way it will go, as this approach is more likely to lead to stable trading.