Analysts see a 25bps BoJ rate hike in September but expect Fed policy shifts to drive yen moves more than further tightening.
USD/JPY remains confined between resistance at 160.00 and support at the 200-day moving average near 158.40, as Bank of Japan officials reinforce hawkish guidance amid steady inflation near the 2% target.
BoJ Deputy Governor Ryozo Himino emphasized the need for timely rate hikes to prevent future inflation spikes, while underlying inflation hovers around or just below the central bank’s goal. Markets price an 80% chance of a 25bps hike to 1.25% at the September 18 meeting.
Analysts argue a weaker USD/JPY is more likely to stem from a dovish Fed repricing than aggressive BoJ tightening, with only 75bps of hikes expected over the next year. FX intervention threats also raise the cost of shorting the yen.