TD Securities forecasts no BoJ hike until December 2026 and expects USD/JPY to trade broadly between 158-163 amid intervention risks.
The Bank of Japan kept its policy rate unchanged at 1% despite Governor Ueda’s hawkish tone, prompting a muted yen reaction. TD Securities now expects the next 25 bps hike only in December 2026, with limited near-term upside for the yen.
Markets have priced in an October hike and 29bps of tightening by year-end, but the BoJ’s cautious stance offers little support for the yen. USD/JPY has already erased over half of its intervention gains, bouncing off the 200-day moving average at 158.
TD Securities sees USD/JPY trading in a 158-163 range in coming weeks, with intervention risks if the pair exceeds 162. Hawkish FOMC dissent and stable US data may limit any USD sell-off, while verbal warnings alone are seen as ineffective in reversing yen weakness.