OCBC strategists Sim Moh Siong and Christopher Wong note USD/JPY stayed range-bound after a mildly hawkish Bank of Japan (BoJ) hold, as cautious guidance and high Oil prices erased initial Yen (JPY) gains. They sees sustained high Oil prices limiting downside below 158, while rallies into the 160s risk Ministry of Finance (MoF) intervention, and it maintains an end-2026 USD/JPY target of 155.

High oil and MoF risk cap extremes

"USD/JPY was choppy but ultimately went nowhere after the Bank of Japan delivered a mildly hawkish hold, keeping the policy rate at 0.75%."

"Sustained high oil prices make a move below USD/JPY 158 difficult."

"Conversely, any rally into the 160s risks Ministry of Finance intervention aimed at pushing the pair back toward 155."

"Overall, we stay cautious on JPY and maintain our end-2026 USD/JPY target of 155."

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