The JPY outperformed alongside the USD as the market digested a headline of the Bank of Japan (BoJ) planning for an eventual rate hike. This puts the market on their toes around the BoJ meeting on Tuesday. Strategists at OCBC Bank expect the USD/JPY pair to trade between 114.00 and 115.00 ahead of the meeting.

BoJ seen telegraphing an eventual interest rate hike

“The Reuters headline about BoJ discussing how to tweak its forward guidance to prepare for rate hikes kept the JPY firm against the USD. As a result, this week’s BoJ meeting (Tue) will take an extra significance, as the market look to decipher its messaging.”

“In the immediate term, expect support at 113.50, with a 114.00 to 115.00 range likely ahead of BoJ meeting.”

“Upside risks from higher UST yields still present, do not be overly excited to the downside.”