JPY softens ahead of BoJ policy decision – Scotiabank

The Japanese Yen (JPY) is slightly weaker versus the US Dollar (USD), underperforming most G10 currencies, as markets await next week’s BoJ meeting where a 25bps rate hike is widely expected. Policymakers signal the potential for further tightening in 2026, keeping USD/JPY range-bound between 154 and 157, Scotiabank’s Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD/JPY stays range-bound amid hawkish BoJ signals

“The yen is entering Friday’s NA session with a 0.2% decline vs. the USD and underperformance against all of the G10 currencies with the exception of the Skandies SEK and NOK.”

“Reports of a constructive, hawkish shift at the BoJ have failed to deliver strength—so far—with media suggesting that policymakers are expecting an extension of the tightening cycle beyond 0.75%. Next week’s BoJ policy decision is widely expected to deliver a 25bpt hike, to 0.75%, and policymakers appear to be paving the way for further tightening in 2026.”

“We are neutral USD/JPY awaiting a break of the recent range bound between the mid-154 and upper-157 areas.”