BoJ Rate Hike Looms: USD/JPY Stalls Ahead of Key Policy Meeting

The USD/JPY exchange rate has stalled near 156.00 ahead of Friday's Bank of Japan (BoJ) policy meeting, which is expected to bring a 25-basis-point hike in interest rates.

This would take the benchmark rate to its highest level since 1991 at 1.25%, as policymakers seek to combat rising inflation pressures partly fueled by high oil prices.

Although markets have largely priced in this expected increase, Governor Kazuo Ueda's guidance on future tightening will be crucial for determining the yen's value against the US dollar.

A dovish message from the BoJ could disappoint yen bulls and push USD/JPY above its 20-day simple moving average near 156.87, potentially leading to a retracement of over half of the decline from the monthly high around 160.40.