USD/JPY faces headwinds as BoJ rate hike timeline shifts to 2026

USD/JPY is trading near 157.20, down 0.15% as economists increasingly expect the Bank of Japan to delay further rate hikes until 2026. Market consensus has shifted dramatically, with over 60% of surveyed economists now forecasting no BoJ action this year, compared to previous expectations of a July or October hike. The postponement reflects concerns about Japan's fragile economic recovery and persistent deflationary pressures despite recent wage growth. USD/JPY has found support at 157.00, with resistance emerging at 157.80. The delayed tightening timeline maintains the wide interest rate differential between the Fed and BoJ, potentially supporting USD/JPY in the medium term. However, any unexpected BoJ hawkishness or signs of accelerating Japanese inflation could trigger sharp yen appreciation, with 155.50 as the next major support level.