USD/JPY Price Forecast: Jumps to near 158.40 as traders reassess hawkish BoJ bets

• USD/JPY jumps to near 158.40 as the Japanese Yen underperforms its peers.
• Traders have trimmed hawkish BoJ bets after September’s SoP release.
• The US Dollar Index posts a fresh annual high near 102.00 due to surging US bond yields.

The Japanese Yen (JPY) underperforms its currency peers on Thursday, with the USD/JPY pair trading 0.55% higher to near 158.40. The Japanese currency trades lower as traders trim Bank of Japan (BoJ) interest rate hike expectations after the release of the Summary of Opinions (SoP) of the September policy meeting earlier in the day.

Yen slides as BoJ summary tempers near-term hike expectations

Analysts at MUFG note that the Yen was “the biggest mover overnight,” weakening by “around 0.5% against the US Dollar,” which “has lifted USD/JPY up to a high of 158.44.” They attribute the move primarily to the release of the “Summary of Opinions from the latest BoJ policy meeting from 17th-18th September,” which “appears to have disappointed some market participants who were looking for a stronger signal that the BoJ were open to another hike as soon as next month.”

According to MUFG, the publication “has prompted the Japanese rate market to scale back BoJ hike expectations.” They highlight that “at the start of this week, the Japanese rate market had been pricing in around 10bps of hikes by the October policy meeting and that has now dropped to around 5bps.” MUFG argues that this repricing “fits with our view that another hike as soon as next month remains unlikely given that the BoJ had just sped up the pace of hikes this month and signalled that it is likely to continue hiking rates every three months.” In line with that guidance, MUFG reiterates: “We expect another hike by the end of this year in December.”

Meanwhile, soaring US Dollar due to firm United States (US) Treasury yields is also strengthening the pair. In the European session, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, posts a fresh yearly high near 102.00.

USD/JPY Technical Analysis

USD/JPY trades at 158.17 at the time of writting. The pair holds above the 20-period Exponential Moving Average (EMA) at 157.23, keeping the near-term bias constructive as price respects trend support. The Relative Strength Index (RSI) at 54 on the daily chart sits in positive territory, suggesting steady bullish momentum rather than overbought conditions.

On the downside, immediate support is seen at the 20-day EMA around 157.23, which protects the recent advance and acts as the key level to maintain the bullish tone. A daily close below this moving average would hint at a deeper corrective phase toward lower levels, while as long as USD/JPY stays above it, buyers are likely to retain control of the short-term trend.

(The technical analysis of this story was written with the help of an AI tool. Know more.)