Dollar-Yen Seeks Direction Ahead of BOJ and Fed Policy Decisions

The dollar-yen pair is expected to seek direction in the coming days ahead of monetary policy meetings in Japan and the United States. In New York trading on Friday, the pair climbed to 155 yen at one point before reversing to 153.99 yen and closing at 154.39 yen.

The sharp price action was driven by dollar buying fueled by higher crude oil prices and position unwinding amid easing geopolitical risks. However, President Trump's statement that the military conflict between the US and Iran would not be prolonged capped crude oil gains and sent long-term interest rates lower, weakening dollar-buying momentum.

The Bank of Japan will hold its policy meeting from the 17th to the 18th, with markets seeing a 0.25% rate hike as nearly certain. Governor Kazuo Ueda's remarks at his press conference regarding the timing of the next rate hike are expected to significantly influence the yen.

Meanwhile, the US Federal Open Market Committee meets from the 15th to the 16th, with a hold on policy rates widely expected. However, lingering rate-hike speculation following last week's August Consumer Price Index release means the committee's decision will draw close attention.