Last week, the FOMC announced its decision. Although this is the most important policy announcement by a central bank, its significance was low this time, and no policy change was expected despite the recent decline in inflation. This is because it is impossible to take action until the impact of Trump’s tariff policy can be assessed.
As expected, the Swiss National Bank cut interest rates by 0.25%, bringing the policy rate to 0%. However, with the Middle East situation escalating, the Swiss franc is unlikely to weaken.

More importantly, with no progress on US tariff policy, the Middle East situation is critical. The likelihood of the US joining the war against Iran is increasing. While the exact outcome remains uncertain, it could lead to a sharp rise in oil prices depending on how events unfold.
There is a high possibility that the United States will become involved in a war between Israel and Iran in the near future, and it seems likely that bunker busters will be dropped on Iran’s nuclear facilities. Amidst such tensions, the dollar-yen exchange rate has finally broken through the 145.50 yen resistance level and is now trading in the upper 145 yen range.
There is also the possibility of further increases in crude oil prices, and there may be a sharp rise in crude oil prices and a sharp fall in the yen, similar to what happened after Russia invaded Ukraine in February 2022.
In this context, Japan’s consumer price index rose by 3.5%, reflecting the rise in U.S. prices, and the core-core index rose by 3.3%, but considering the impact of tariffs, the Bank of Japan cannot raise interest rates.

There is also the possibility of increased dollar buying in times of crisis, but rather than making a decisive move, it is advisable to maintain a flexible stance that can respond to the situation.
Perhaps it would be prudent to target the yen’s weakness through a process of elimination. The cross-yen chart is showing signs of a potential resumption of upward movement.