BOJ Rate Hike Imminent: Yen Could Weaken to ¥159

The Bank of Japan is set to announce its latest rate decision on January 18th, with markets widely expecting a 25-basis-point hike to 1.25%. This would be the BOJ's second rate increase in three months and the fastest pace of tightening since 1990.

However, several Wall Street institutions have turned more cautious on the yen's near-term trajectory, arguing that even if the hike materializes, the yen could still weaken because the move has already been fully priced in. Some analysts expect USD/JPY to test ¥159.

Citigroup strategist Daniel Tobon views recent policy shifts as part of a 'regime change' favorable to the yen, arguing that the currency retains appreciation potential over the long run.