The BOJ decided on an additional rate hike at its September meeting. With downward pressure on the yen intensifying, USD/JPY is expected to remain in the mid-¥150s to around ¥160 for the time being.
The BOJ raised its policy rate to 1.25% at its 17–18 September monetary policy meeting. This accelerated the pace of policy normalization.
In the foreign exchange market, the yen's downtrend is expected to continue even after the rate hike, with developments in the Japan–US interest-rate differential cited as a key factor. Expectations of an additional rate hike by the FOMC are also expected to have an impact.
Renewed deterioration in the Middle East and the resulting rise in oil prices have been identified as the biggest source of downward pressure on the yen. Many believe that higher oil prices will weaken the yen through Japan's vulnerable trade position.
In the short term, USD/JPY is expected to trade from the mid-¥150s to around ¥160.