EL7.AI
ForexMediumUpdated•Originally published 5 March 2026•Updated 6 March 2026•
1 min read

USD/JPY Gains Tempered by MUFG Forecast of Potential BoJ Rate Hike in April

Key Facts

1Traders pared back Fed rate cut bets to 41 bps by year-end, down from 58 bps previously.
2Japanese CPI fell below the BoJ's 2% target, undermining the case for near-term rate hikes.
3US data showed the economy has been re-accelerating since the start of the year rather than slowing down.

The USD/JPY pair remains under focus as market participants weigh resilient US economic data against shifting expectations for the Bank of Japan (BoJ). While traders have scaled back Fed rate cut bets to 41 basis points by year-end, new analysis from MUFG suggests a potential hawkish turn in Japan. Lee Hardman, Senior Currency Analyst at MUFG, noted that the BoJ remains on track to raise interest rates, potentially as early as April. This outlook has helped the Japanese Yen maintain relative stability despite recent energy price shocks. The divergence between a 'higher-for-longer' Fed and a normalizing BoJ is creating a more complex environment for the currency pair. Consequently, the previous bullish momentum for the Dollar may face headwinds if Japanese monetary tightening materializes sooner than expected.