Markets price in 20 basis points of Bank of Japan tightening for September, lifting yen expectations but leaving room for further upside.
USD/JPY remains rangebound between 158.00 and the mid-159s as the yen lags most G10 currencies, down 0.1% against the dollar. Major banks have adjusted their Bank of Japan tightening forecasts to September, pushing market pricing to around 20 basis points for the next move.
The yen’s underperformance persists despite shifting expectations, with limited fundamental data releases this week. Attention now turns to the BoJ’s tone beyond its September 18 meeting, as traders assess potential policy signals. Current pricing suggests room for additional near-term upside in USD/JPY.
Analysts note the recent flat trading range reflects cautious positioning ahead of the central bank’s next steps. The focus remains on whether the BoJ will signal further tightening beyond September.