The dollar/yen pair temporarily dropped to 127.24,falling to the lowest level in about seven and a half months since May 30 last year. As a result, the Fibonacci retracement half-price (132.71) and 61.8% push (128.17) were achieved,starting from the annual low of 113.47 recorded on January 24 last year and the annual high of 151.95 recorded on October 21 last year. All value returns have also come into view.

(1) Expectations of an early termination of monetary tightening by the U.S. Federal Reserve.

(2) The Bank of Japan is expected to revise monetary easing (The Yomiuri Shimbun last week said.)

(3) Concern about yen carry trade and reversal against the background of 1 and 2 above ( IMM currency futures non-commercial sector open interest as of January 10, announced by the U.S. CFTC on January 13, has shrunk to 35,377 yen net short contracts.)

(4) A combination of multiple dollar-selling and yen-buying factors, such as the US debt ceiling problem (There is fear that it will take longer than expected to reach an agreement due to the twisted House of Representatives.)

In terms of technical and fundamental factors,we continue to expect the main scenario to continue the trend of selling the dollar and buying the yen. As this week’s main event, the Bank of Japan’s Monetary Policy Meeting, is approaching, it is likely that a wait-and-see mood will spread, and the dollar/yen pair will continue to move up and down, but it will be difficult to find a sense of direction.

Today, we will be discussing China’s major economic indicators (China’s October-December quarter GDP statistics, December retail sales, December industrial production, and December fixed asset investment), as well as the January New York Federal Reserve Manufacturing Index. New York Federal Reserve Bank President Williams, etc.

Today’s expected range: 127.75-129.25

Analyst: Mr. Naoto Arase, Independent Analyst