BoJ Decision Looms: Yen Strengthens Against US Dollar

The Japanese Yen has been outperforming other currencies, with a modest 0.2% gain, and is showing signs of strength against the US Dollar ahead of the Bank of Japan's (BoJ) decision on September 18.

According to Scotiabank strategists Shaun Osborne and Eric Theoret, markets have fully priced in a 25 bp rate hike by the BoJ, but risks are tilted towards further Yen gains due to positioning that looks increasingly offside.

The pair USD/JPY is drifting toward key support near 153, with no additional support expected until it reaches the 2026 low around 152.

The strategists see resistance now coming in at 155, which had previously provided support. They note that the market has shifted from official intervention support to fundamentally-driven BoJ-led gains.