As the year-end market approaches, the volatility of the dollar-yen exchange rate is increasing. The reason for this is that the expansion of the YCC fluctuation range shocked the market at the Bank of Japan decision meeting on December 20. In the market, attention to the dollar-yen exchange rate is increasing ahead of the next meeting on January 18 next year. In the currency options market, the one-week rate is about 12.3%, while the one-month rate is at a high level of about 13.4%. Eurodollar is 8.6% and pound/dollar is 10.5% for one month, which shows the high expectations of fluctuations in the dollar/yen.
After the plunge on December 20, the dollar/yen continued to rebound. However, the rising momentum has now come to a halt, with the stock falling back from the mid-134 yen range to the mid-133 yen range. As the year-end market takes a wait-and-see mood, it is likely that the dollar-yen exchange rate trend will be forecasted for next year.
The market seems to be dominated by the Bank of Japan’s monetary policy normalization scenario. Has the dollar-yen sell-back point already been reached? Or to see if there will be another buyback.
The US 10-year bond yield has shown an upward trend since the most recent US FOMC, supporting the dollar market. However, the rebound of the dollar index is currently weak. The dollar/yen pair is likely to seek a downward trend again.
Since the rising movement has also come to a halt, USDJPY’s sell entry was made earlier with a sell order at 134.50. Basically, considering the expectations of the Bank of Japan to normalize its monetary policy toward next year, I think there is a high possibility that the yen will appreciate again.