USD/JPY is strengthening for a second day in a row amid continued USD buying. Fed-BoJ policy divergence continues to weaken yen and provide support. There is no bullish conviction on the upside, as the focus remains on the FOMC meeting. At , , the USD / JPY pair rose for the second consecutive Monday and is looking to recover from the psychological point of 1 5.00, a near three-week low hit last Thursday. The pair maintained modest gains in the first half of the European session and is currently near multi-day highs, just below the 1 8.00 midpoint. JPY , continued to be weakened by the Bank of Japan, which kept interest rates at a record low on Friday and confirmed it will continue to keep the 10-year bond yield at 0%. The central bank reiterated the need for stimulus policy amid a resurgence of COVID-19 cases in China and fears of a global recession. This, along with the USD buying rate, continues to support the USD/JPY pair. In fact, the USD index, which measures the dollar’s performance against a basket of currencies, continues to recover from last week’s more than one-month low as US Treasury yields rise. The prospect of another 75 basis point rate cut by the Federal Reserve in November proved to be a key factor raising the US Treasury and supporting the dollar. However, USD bulls seem reluctant to make aggressive bets ahead of this week’s key political risk. The Federal Reserve will announce its monetary policy decision on Wednesday, and investors will be looking for new clues about the path of future rates. So the attached policy statement and the post-meeting press conference will remain the focus of attention. This affects USD price dynamics and helps determine the next phase of USD/JPY’s directional movement. Meanwhile, higher US bond yields should act as a tailwind for the USD without relevant economic data.

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