Yen firms as BoJ hike bets strengthen amid global rate pressure

The Japanese Yen is showing renewed strength after weakening earlier in the week, with USD/JPY trading near 154 as markets reassess the outlook for Bank of Japan policy. Elevated Japanese wholesale inflation is reinforcing expectations for another rate increase.

Markets widely expect the BoJ to raise rates next week, potentially by 25 basis points. Investors are also watching whether policymakers signal a faster tightening path if price pressures remain persistent.

At the same time, rising US Treasury yields and a stronger dollar are limiting the Yen's upside. The currency remains highly sensitive to the gap between US and Japanese interest rates, making the next BoJ decision and US inflation data important catalysts.

For traders, the key risk is a renewed policy divergence. A more hawkish BoJ could push USD/JPY lower, while stronger US inflation and higher Treasury yields could restore demand for the dollar.