USD/JPY is expected to trade mainly in the ¥156.70–¥158.50 range from 28 September to 5 October 2026. The strength of expectations for October rate hikes by the Fed and the BOJ, crude oil prices and IMM positions are cited as factors that will determine the size of the move.
USD/JPY is expected to trade mainly in the ¥156.70–¥158.50 range during the period under review, with the outcome of the U.S. and Japanese interest-rate outlooks and the weight of market drivers cited as factors determining the direction of the move. The direction of a break from the range is said to depend on expectations for an October Fed rate hike and any revision to views on the BOJ, while IMM positioning and crude oil trends are expected to amplify the size of the move.
In the previous week's trading, USD/JPY reached the ¥159 range at one point, but then fell as concerns over yen depreciation and the prospect of intervention in both Japan and the United States intensified. Yen longs in the IMM market remain, but the net long position has narrowed, and the unwinding of positions could influence this week's movement.
Yen longs remain dominant in IMM positioning. If expectations for higher U.S. interest rates exceed expectations for a BOJ rate hike, the unwinding of yen-supportive factors could accelerate. Conversely, if expectations for a BOJ rate hike in October strengthen, investors could add to yen-long positions again. Crude oil prices are expected to move in either direction. Higher oil prices could support a weaker yen by pushing up U.S. interest rates and increasing Japan's import burden, while lower oil prices could push USD/JPY lower through lower U.S. interest rates and a reduced import burden for Japan.