Yen at Risk of Falling Below 158 as BOJ Hike Fails to Offset Fed Pressure

The Bank of Japan's interest rate decision on Friday has put pressure on the yen, which is already trading near a two-week low. The Federal Reserve's hawkish rate hike earlier this week boosted the US dollar, pushing the yen down to around 155.98.

Analysts believe that if Kazuo Ueda fails to provide a clear path for subsequent consecutive tightening, the yen could face immediate downward pressure, breaking below the 158 threshold and testing 160 once more.

Rinto Maruyama, Senior Interest Rate and FX Strategist at SMBC Nikko Securities, pointed out that the anticipated hike will bring Japan's policy rate to the lower end of the estimated neutral rate range. If this meeting is interpreted by the market as dovish, the next upside target for USD/JPY will be 158.

Glenn Yin, Research Director at ACCM in Sydney, warned that if the Bank of Japan disappoints the market, 'the risk of breaching the 160 level in the short term cannot be ruled out.'