BoJ Rate Check Halts Yen Sell-Off as External Pressures Mount

The yen sell-off after the Bank of Japan's (BoJ) policy update was curtailed by a rate check, indicating the central bank's limited tolerance for renewed yen weakness.

USD/JPY initially reached 158.05 before dropping back to around 157.00 as market expectations for further rate hikes were dampened.

The BoJ has already priced in two to three more hikes by mid-2027, with the next hike almost fully priced in by December.

However, renewed yen selling reflected the challenging external backdrop, particularly after the Federal Reserve began its own rate hike cycle and signaled at least one more hike ahead.