USD/JPY: Credit Agricole advises traders to buy on dips this week, ahead of Fed and BoJ meetings

In a note published today, Credit Agricole assesses the potential impact of the Fed meeting tomorrow on the USD/JPY:

"In the very short term, market sentiment will depend on the Fed meeting. The combination of the stabilisation of Chinese growth, strong US domestic conditions and improving commodity prices should improve medium-term inflation expectations and thus allow the Fed to consider less dovish statements.

However, a more hawkish stance from the Fed could be canceled soon after by an even more aggressive stance by the BoJ (our economists anticipate an increase in QE this week).

In the end, we believe that the divergence of monetary policy between the US and Japan continues to suggest that the USD/JPY should be bought on dips."