Citi expects USD/JPY to remain range-bound amid BoJ’s rate decision

Citi expects the Bank of Japan to keep its policy rate at 1.25% at next week’s meeting. The bank does not anticipate major surprises from central bank meetings scheduled for next week, which include the Federal Open Market Committee and the European Central Bank Governing Council.

The bank projects the USD/JPY currency pair will stay within a range of ¥155 to ¥160 per dollar in the near term. Citi notes that after recent declines in the pair, there is room for a short-term rebound.

Japan’s currency policy is becoming more hawkish, according to the bank. Citi expects the dollar to remain broadly strong leading up to the mid-term elections.

The bank anticipates the next round of intervention to buy the yen would occur if USD/JPY rises above ¥160 per dollar, with the goal of pushing the pair below ¥155.