The yen could remain under downward pressure over the next two to three months.

A key downside factor is the slowing U.S. growth, which is impeding Japanese exports.

A resultant fall in Japan's trade surplus will leave the market short on the dollar.

Policies being pursued by Prime Minister Junichiro Koizumi's Cabinet could also weigh on the yen. The economic reform program pledged by the prime minister is no doubt a positive scenario for economic recovery in the medium term, but we must look at the other side of the coin.

Sweeping restructuring could cause more bankruptcies and increase unemployment, and, as Koizumi has warned, the nation's gross domestic product may fall short of the year-before level.

In retrospect, it is interesting to note that the dollar-yen exchange rate has often repeated seasonal patterns in the past 15 years.

The currency market often struggled to find its way in the first quarter every year.

The dollar then came under downward pressure before rebounding in May and the uptrend continued through much of the rest of the summer. After turning lower at the start of fall, the dollar often recouped much of its losses toward year's end.

Although the seasonal pattern does not always repeat, past experience cannot be ignored when looking at the future course of events.