【The Calm Before the Market Moves? The Next Move the USD/JPY Market Is Watching】

This week’s foreign exchange market has been relatively calm, centered on USD/JPY. However, among market participants, the view is growing that this is not a sign of reassurance because nothing is moving, but a phase preparing for the next big move.

Looking back over the past few years of the USD/JPY market, a yen weakness trend has continued against the backdrop of tightening monetary policy in the United States and the rate gap between Japan and the United States. But the current situation is no longer as straightforward as it was then.

First, attention is on U.S. monetary policy. The market is probing the pace of future rate cuts by the Fed. Inflation has calmed compared to before, but there are still times when it remains above the target level, and the Fed has not abandoned a cautious stance.

Because of this, the dollar is not easily sold off, which supports the downside in the USD/JPY pair.

On the other hand, there are signs of change on the Japanese side as well. The Bank of Japan has been moving gradually toward normalization after a long period of ultra-loose policy. In the market, various discussions are taking place about the possibility of additional rate hikes, but considering the impact on the economy and prices, some view that rapid policy changes are unlikely.

As a result,

“There is little reason to actively sell the dollar.”

“There are limited reasons to actively buy the yen.”

and this situation has led to the current stalemate.

Furthermore, geopolitical risks are a concern for the market.

Middle East tensions and political strains around the world continue, and a sudden news event could intensify risk-off moves. In such situations, yen buying can advance, so be careful about a one-sided long USD/JPY view.

Additionally, recent markets have seen a growing impact from algorithmic trading and high-frequency trading. Movements that used to appear as clean trends are increasingly fluctuating up and down in short periods.

Therefore, for individual investors, the important thing is not "to forecast accurately" but to "prepare for the unexpected."

For example,

・Set clear stop-loss levels

・Keep position sizes modest

・Do not hold positions before important indicators

and such basic risk management practices are more important now than ever.

In particular, when scalping or day trading, deciding "I won’t trade today" is also a valid strategy.

The market may look like there are opportunities every day, but truly advantageous moments are limited. Waiting for your favorable pattern rather than forcing more entries tends to lead to stable long-term performance.

Currently, the USD/JPY market can be seen as an energy accumulation phase before a strong directional move emerges.

That’s why now more than ever, instead of trying to predict which way it will move, it is important to prepare to respond whichever direction it goes.

What is needed to survive in the market is not predictive power alone. The flexibility to adapt to changes is likely to be the greatest weapon required in the market going forward.