USD/JPY Outlook:
Slightly weaker, but likely to move sideways as the rate is near its 90-day average and lacks a clear driver.
Key drivers:
• Rate gap: The Federal Reserve has held interest rates steady while the Bank of Japan has raised its rates, creating a more attractive environment for the yen.
• Risk/commodities: Oil prices are currently above average, which may boost the Japanese economy and strengthen the yen against the dollar.
• One macro factor: Concern over the US labor market ahead of key job data is affecting the dollar's position.
Range:
The USD/JPY is likely to hold within its recent averages, reflecting stability in its movements.
What could change it:
• Upside risk: Strong US retail sales data could support the dollar significantly.
• Downside risk: Renewed speculation about Japanese government intervention in currency markets could lead to a stronger yen.