Important events today:

18.09 06:30 UTC: JPY – Bank of Japan Press Conference.

The Bank of Japan raised its interest rate from 1.00% to 1.25%, bringing it to a 31-year high. The decision was made by a 7-to-2 majority vote and aims to limit the risk of overshooting the inflation target. However, the hike was already expected by the market, so the tightening itself failed to provide the yen with sustainable strength, and USD/JPY held above 156.

The interest rate differential between the United States and Japan has narrowed but remains substantial. The Federal Reserve raised its target range to 3.75%–4.00% and delivered a more hawkish signal regarding future actions. Against this backdrop, carry trade operations continue to support the dollar, especially if the Bank of Japan’s comments fail to convince the market of a willingness to accelerate subsequent hikes.

The upside potential for USD/JPY is limited by further normalization of Bank of Japan policy and official sensitivity to yen weakness. Nevertheless, the initial reaction shows that the anticipated rate hike was largely priced in. As long as the American regulator maintains a higher rate and leaves room for further tightening, the baseline fundamental scenario continues to favor a moderate rise in the pair.

Recommendations: BUY 156.20, SL 155.80, TP 157.20.