USD/JPY faces pressure as BOJ hints at policy shift by year-end

USD/JPY is trading 0.4% lower at 155.80 as the Japanese yen strengthens on growing expectations of Bank of Japan policy normalization. National Australia Bank forecasts the pair could fall below 140.00 by late 2025, representing a potential 10% decline from current levels. The yen's appreciation prospects are supported by Japan's improving inflation dynamics and wage growth, which may prompt the BOJ to exit negative interest rates sooner than previously anticipated. Meanwhile, the Federal Reserve's potential rate cuts in H2 2025 could narrow the US-Japan yield differential, further supporting yen strength. Technical analysis shows USD/JPY facing immediate resistance at 156.50, with key support at 155.00. A break below this level could accelerate the decline toward 153.50. Traders should monitor upcoming BOJ policy meetings and Japanese CPI data for confirmation of the policy shift narrative.