Analysts forecast the yen may strengthen as the Bank of Japan accelerates rate hikes amid US Treasury debt plans pressuring the dollar.
The USD/JPY pair traded in a narrow range around 159.00 during Asian trading on Friday, reflecting consolidation as both currencies underperformed against peers. The dollar’s pullback, driven by US Treasury plans to increase debt repurchases, eased upward pressure on the pair.
Market focus remains on the Bank of Japan’s expected monetary tightening, with Rabobank forecasting a 3-month USD/JPY target of 158, assuming accelerated rate hikes. However, analysts caution that further upside attempts cannot be ruled out, particularly near the psychologically significant 160 level.
The yen’s potential outperformance stems from expectations of a tighter BoJ policy path, contrasting with the dollar’s vulnerability to US debt management strategies aimed at reducing borrowing costs.