Ella 
USD/JPY attracted some dip buying on Monday and now appears to have broken off the pullback decline from the 150.75-150.80 area, the highest level since October 2022 hit last week. However, USD/JPY lacks bullish momentum and is currently trading around the 149.70-149.75 area, up less than 0.10% on the day, as traders will focus on the key central bank meeting before placing new directional bets.
The Bank of Japan is scheduled to announce an interest rate decision on Tuesday, and market speculation is rising that the Bank of Japan may adjust its bond yield control curve policy. However, the Bank of Japan is unlikely to exit its policy of implementing negative interest rates. This marks a huge divergence between the Bank of Japan’s monetary policy and that of other major central banks, including the Federal Reserve. Coupled with positive market risk appetite, it is seen as suppressing the safe-haven function of the Japanese yen (JPY) and becoming a rally for USD/JPY key factors.
On the other hand, the dollar continues to get some support from rising U.S. bond yields, supported by hawkish expectations from the Federal Reserve. Data released last week showed that the U.S. economy grew at its fastest pace in nearly two years in the third quarter. Separately, the Commerce Department reported that consumer spending rose more than expected in September and that the monthly rate of inflation also rose. This shows that the fundamentals of the U.S. economy remain solid and supports the prospect of further tightening by the Federal Reserve.
However, investors appear confident that the Fed will remain on hold for the second consecutive time on Wednesday when it concludes its two-day policy meeting. This, in turn, inhibits dollar bulls from making aggressive bets. In addition, speculation that the Japanese authorities will intervene in the foreign exchange market in response to the continued depreciation of the yen has further suppressed the trend of USD/JPY ahead of the key resolution. However, the fundamental backdrop appears to favor USD/JPY bulls.
