Dollar Struggles as Yen Gains Ground Amid Central Bank Decision Week

The US dollar is experiencing pressure against the Japanese yen due to potential shifts in Japanese interest rate policy, despite the interest rate differential favoring the USA. The dollar has fallen slightly during trading on Friday as traders continue to abandon the carry trade.

Market commentator Christopher Lewis notes that the Federal Reserve's upcoming interest rate hike and the Bank of Japan's possible rate increase will be closely watched for commentary and forward guidance. If the Japanese central bank raises rates, it may send the market back into a decline.

The USD/JPY pair has been trying to find its bottom, with some stabilization attempts in the short term. Breaking above the ¥155 level could open up the possibility of a move to ¥156.50 or ¥157, but Lewis cautions that this would be a 'long slog' higher.