The US FOMC and the BOJ meeting are being viewed as turning points for the year-end outlook toward the end of 2026, with USD/JPY expected to become more active around ¥160 and intervention concerns to intensify. Some market participants also expect volatility to rise to extremely high levels.
The 2026 foreign exchange market outlook identifies the US FOMC and the Bank of Japan's monetary policy meetings as the year's biggest turning points, referring to them as the US-Japan central bank week, with expectations that they will determine where the market settles by year-end. In the United States, expectations for a rate hike by year-end are increasing, and USD/JPY is expected to become more active.
In Japan, expectations for an additional rate hike have also emerged, and the possibility of raising rates from their current level is a key focus for the market. As both the US and Japan adopt a more hawkish stance, USD/JPY is likely to fluctuate around ¥160, while intervention concerns intensify.
Key events shaping the year-end market include the size of the FOMC rate hike and whether the BOJ meeting results in a rate increase. The FOMC has the option of a 25-basis-point or 50-basis-point hike, and the market's interest-rate outlook could shift significantly depending on revisions to the dot plot. At the BOJ meeting, the focus will be on whether to raise rates further to 1.50% and on Governor Ueda's press conference.
Toward year-end, the tug-of-war between upward pressure on the dollar and downward pressure on the yen is expected to intensify, creating conditions in which the market may need to prepare for sharp price swings, including intervention risk and wider spreads caused by thin trading.