The recent rally in the yen based on expectations for an early policy shift has run out steam.
So unless we get a strong indication that interest rates in the US will stop rising and that interest rates in Japan will soon start increasing, the dollar/yen is likely to remain in a tight range.
The yen failed to draw follow-through buying, as the market has now fully priced in the likely end of the five-year super-loose monetary policy at next week's (policy board) meeting.
Due to fresh concerns over interest rate hikes, Japanese institutional investors, who normally start buying the dollar from around the beginning of the new fiscal year are not so active right now.
In addition, the market seems to have come to the conclusion that an end to the quantitative monetary policy does not necessarily mean the start of interest rate rises.
