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Published: 18 September 2026,10:31
Daily Market Analysis New
*The Bank of Japan is widely expected to raise rates by 25bp to 1.25%, with the move already largely priced in. The yen has strengthened in recent weeks as markets positioned for continued policy normalisation.
*Markets will focus on Governor Ueda’s comments and the policy statement rather than the hike itself. A hawkish signal for further tightening could reinforce yen strength and keep USD/JPY under pressure.
*A cautious outlook with limited guidance on additional hikes could trigger profit-taking and yen selling, allowing USD/JPY to rebound. Traders will closely monitor the BoJ’s assessment of inflation, economic conditions and the future rate path.
Markets are fully focused on the Bank of Japan’s interest rate decision due in the Asian session today, with the outcome expected to set the near-term direction for the Japanese yen. The central bank is widely anticipated to raise its policy rate by 25 basis points to 1.25 percent, a level not seen in more than three decades. This expectation has already driven a notable appreciation in the yen over recent weeks as investors positioned for further policy normalisation.
Because the rate increase itself is largely priced in, attention has shifted decisively to the accompanying monetary policy statement and Governor Kazuo Ueda’s subsequent press conference. A hawkish narrative that signals an accelerated or sustained path of further rate hikes would likely reinforce yen strength by narrowing interest-rate differentials with other major economies and discouraging yen-funded carry trades. Such an outcome could extend the currency’s recent gains and keep USD/JPY under pressure.
Conversely, a more neutral or cautious tone that offers limited guidance on the pace of additional tightening risks a “sell-the-fact” reaction. With the hike already reflected in market pricing, disappointment over the forward-looking language could prompt profit-taking and a round of yen selling, allowing USD/JPY to rebound from current levels. In the near term, the yen’s trajectory will therefore depend less on the headline rate decision and more on the perceived commitment to continued policy normalisation. Traders will closely parse any comments on inflation risks, economic conditions, and the future path of rates for clues that could either sustain or reverse the recent yen strength.
USDJPY, H4:
The USD/JPY pair has been trading within a higher-high price structure, maintaining a bullish market trajectory as it approaches the key liquidity zone near the 156.00 mark. Given the recent upward momentum, the pair could first experience a technical retracement following a potential liquidity grab around this area.
However, a decisive breakout above the 156.00 liquidity zone would provide a stronger bullish signal and suggest that buyers are gaining further control. Should the breakout be sustained, USD/JPY could extend its current uptrend and potentially challenge the next immediate resistance level at 158.00.
Conversely, failure to break above 156.00 could trigger a technical correction as selling pressure emerges around the liquidity zone. A rejection from this area would suggest that the pair may require further consolidation before attempting another move higher.
Resistance Levels: 158.00, 160.60
Support Levels:155.60, 153.00
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