Japan Rate Hike Expectations Weigh on USD/JPY Pair
The USD/JPY pair fell below the 156 level during the Asian session on Monday, but market expectations of a Bank of Japan rate hike are supporting the yen.
Traders have largely priced in the possibility of a 25-basis-point rate hike at the BoJ's meeting on September 17-18, and discussions are emerging about potential policy adjustments in December.
The heightened market expectation of BoJ tightening is exerting downward pressure on USD/JPY, as the expected interest rate differential between the U.S. and Japan narrows further.