USD/JPY is higher following the release of revised US economic data but its topside remains heavy because market participants are still not confident about the Fed and BoJ’s next moves.
"Next week’s ECB meeting may not affect USD/JPY as much as it did in December, though EUR/JPY did rise then. The upper bound for USD/JPY around 115.50 ahead of the BoJ and Fed meetings may be supported by Japanese exporters. The ECB decision may boost market expectations for more easing by the BoJ.
However more easing could weaken market confidence, just as the January decision did. BoJ Governor Kuroda will have to clarify how he intends to encourage Japanese companies to make more capital outlays.
In our view, the BoJ will not ease further this month," BTMU argues.
BTMU is neutral on USD/JPY around current levels seeing the pair trading in 112.50-115.50 range in the near-term.
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