MUFG Research discusses USD/JPY tactical outlook and adopts a neutral bias, expecting the pair to trade in 106.50-109.50 range in the near-term.

"We expect that the BoJ will likely stay the course on monetary policy with no surprises. Japanese investors have been buying foreign bonds with JPY forward hedges.  Negative yields will probably keep supporting their foreign bond buying. We expect the FOMC to cut policy rates by 25bps, but this has already been priced in and is unlikely to have much impact. Fed Chair Powell may strike a neutral stance in his comments after the meeting, but this depends on any political pressure. US Treasury yields would support a stronger USD, and the 109.00-level could come into view. But expectations of more easing are diminishing in the US stock market, and USD/JPY will likely be top-heavy. High-level talks between the US and China will be important, but are not likely to impact USD/JPY much," MUFG adds.