Many market participants expect USD/JPY to remain near current levels over the next several months, with attention focused on whether it can hold in the upper ¥158 range.
USD/JPY extended its gains to around ¥158.75 on the 16th and has since remained above its 200-day moving average. Views have emerged that the pair will trade near current levels over the next several months. Market participants indicated that neither Japan nor the US wants the pair to move above ¥160.
However, some analysis suggests that renewed yen appreciation would require the Federal Reserve to adopt a more cautious stance on rate hikes and the Bank of Japan to raise its policy rate substantially. There are also views that it may be necessary to wait until the April–June quarter of 2027 for such conditions to materialise.