Core Viewpoint - The Federal Reserve is set to release the FOMC interest rate decision statement and the quarterly economic projections (SEP) at 02:00 Beijing time [1] Group 1 - The announcement is anticipated to provide insights into the Fed's monetary policy direction [1] - Market participants are closely monitoring the decision for indications of future interest rate changes [1] - The quarterly economic projections will likely include updates on inflation, unemployment, and GDP growth forecasts [1]

Group 1 - The Japanese yen has weakened for the fourth consecutive trading day, approaching monthly lows against the US dollar, primarily due to the Bank of Japan's cautious signal regarding exiting monetary easing [1][3] - Market expectations for the next interest rate hike in Japan have been significantly pushed back to the first quarter of 2026, leading to a loss of the yen's interest rate advantage [3] - Japan's domestic economic data is concerning, with a 9.1% decline in machinery orders in April, reversing a strong 13% growth in March, marking the worst performance since the onset of the pandemic in 2020 [3] Group 2 - The US economic data has also been disappointing, with a 0.9% decline in retail sales in May, worse than the expected 0.7%, and a 0.2% drop in industrial output, reinforcing expectations for a potential rate cut by the Federal Reserve in September [3] - The escalation of tensions in the Middle East has provided short-term support for the US dollar, as safe-haven flows limit its downside [4] - Technical analysis indicates that the USD/JPY pair has successfully broken above the 145.00 level, suggesting potential upward momentum, with targets set at 146.00 and 146.25-146.30 [4][5] Group 3 - The current USD/JPY trend is driven by diverging monetary policies, with the Bank of Japan maintaining a dovish stance and lacking intentions for tightening, while uncertainty remains regarding the Federal Reserve's policy direction [5] - If the Federal Reserve signals that it will consider rate cuts only after September, the USD/JPY exchange rate may break through key resistance levels and continue its upward trend [5]

Core Viewpoint - Traders are significantly bearish on the US dollar ahead of the FOMC interest rate decision, as indicated by the Bloomberg Dollar Spot Index's one-month risk reversal [1] Group 1 - As of May 7, the one-month risk reversal indicator for the Bloomberg Dollar Index stands at 0.50%, with a predominance of put options [1] - This indicator is close to the year-to-date low of 0.55% recorded on April 11, highlighting a continued bearish sentiment towards the dollar [1]