Markets

USD/JPY Hits 157.45 as Fed Rate Hike Odds Rise to 53%

By Markets Desk · 2026-09-21 · 1 min read

The yen weakens to record lows despite Bank of Japan tightening, driven by hawkish US Federal Reserve signals.

Key points

USD/JPY trades at 157.45, up 0.36%, as the yen weakens despite recent central bank tightening.
The chance of a US Fed rate hike in October rose to 53%, up from 43% a week earlier.
The Bank of Japan raised its policy rate to 1.25%, the highest level in 31 years.

USD/JPY trades at 157.45, up 0.36% on the day. The pair sits near recent highs despite Bank of Japan monetary tightening.

The Federal Reserve raised rates for the first time in three years. Investors now see a 53% chance of another hike in October.

Fed Chair Kevin Warsh delivered a message more hawkish than expected. This shift pushed the probability of an October rate hike from 43% to 53%.

Markets now price a 90% chance of at least one more hike by year-end. This expectation keeps US Treasury yields elevated and supports the dollar.

The Bank of Japan raised its policy rate to 1.25%. This marks the highest level in 31 years for the central bank.

Two board members called for patience before further tightening. This internal division raises questions about the pace of monetary normalization.

The BoJ conducted a rate check with market participants on Friday. This action is closely watched as a potential precursor to FX intervention.

Mitrade notes that further yen weakness could trigger action by Japanese authorities. Geopolitical risks and US data remain key drivers for USD/JPY.

Based on reporting by Mitrade, compiled by the Tradingbird desk.