Forex
Home›Forex›Major Pairs›BNP Paribas flags BoJ tightening and weaker yen outloo…
BNP Paribas flags BoJ tightening and weaker yen outlook for USD/JPY
BNP Paribas expects the Bank of Japan to hike toward a 2.50% terminal rate by 2028 and projects USD/JPY at 165 by Q4 2026.
BNP Paribas strategists expect Japan’s economic growth to cool, citing higher inflation and energy related costs, with GDP growth slowing to 0.8% in 2026 from 1.1% in 2025. They said fiscal support and AI investment could partly offset the drag.
The strategists forecast the Bank of Japan will keep tightening, with hikes of 25 basis points every four to five months, targeting a 2.50% terminal rate by 2028. On that path, they project USD/JPY at 165 by Q4 2026.
The outlook was highlighted in an FXStreet market note, which also pointed to the yen reaction as investors weigh BoJ policy expectations and Japan’s growth and cost pressures. FXStreet further noted that upcoming US consumer confidence data could be watched for additional dollar direction.
FXStreet’s note also included separate context for other FX moves, including GBP/USD trading below 1.3300 and EUR/USD easing after failing to hold above 1.1400.
Latest closeEUR/USD 1.137 ▼0.3%|USD/JPY 163.79 ▲0.4%|GBP/USD 1.332 ▼0.4%