TD Securities’ Alex Loo notes that despite Governor Ueda’s hawkish tone, the Japanese Yen reaction was muted and the BoJ kept its policy rate at 1%. The bank expects the next 25 bps hike only in December 2026 and sees USD/JPY trading in a broad 158–163 range in coming weeks, with intervention risks if USD/JPY moves above 162.

USD/JPY seen in broad range

"Traders are likely to be wary of follow-up intervention efforts given JPY's muted reaction. We see USD/JPY in a wide trading range in coming weeks."

"With OIS markets close to fully pricing an October hike, and 29bps by year-end, there is little that BoJ can do to jolt the JPY stronger, unless the BoJ delivers 2 hikes in the second half of 2026."

"The ball is now back in the government's court to address the weakness in JPY. The JPY has erased more than half of its intervention gains, bouncing off the 200dma at 158 overnight and the MoF may step in again post-BoJ if USD/JPY reverts to > 162 level."

"We think USD/JPY is likely to trade in a 5 big figure range (158-163) in the coming weeks as the USD may stay supported from hawkish FOMC dissents. Absent a material slump in US data, we believe any USD sell-off will be limited."

"It is clear verbal jawboning no longer influences JPY price action as effectively in 2026 and more forceful and imminent actions would likely be required to curb the prevailing bearish JPY bias."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)