Ella 
The yen remains on the defensive against the dollar ahead of Wednesday’s European trading session, weighed by the diminishing likelihood of an imminent shift in the Bank of Japan’s (BoJ) policy stance. In fact, the report shows that Bank of Japan policymakers see no need to end negative interest rates in December. This, coupled with the latest optimism stemming from hopes of further policy support and additional stimulus from China, is a key factor weakening the yen.
However, the USD/JPY pair struggled to capitalize on the previous day’s decent bounce around 75 points following the release of the sticky US inflation report and oscillated in a range amid weakness in USD prices. Uncertainty about the Fed’s near-term policy outlook has hindered U.S. dollar bulls from making new bets and acted as a headwind for major currencies. Additionally, investors chose to wait and see ahead of key FOMC policy decisions.
The Fed is widely expected to keep rates on hold, although the latest economic forecasts and comments from Fed Chairman Jerome Powell at his post-meeting press conference should provide clues about the future path of interest rates. In turn, the outlook will play a key role in influencing USD price dynamics and provide some meaningful momentum to the USD/JPY pair. Market focus will shift to the much-anticipated Bank of Japan monetary policy meeting next week.
