Bearish to 159! Ahead of the Bank of Japan's Friday decision, Wall Street strategists collectively bet on yen weakness.

Title context: Bearish to 159! Ahead of the Bank of Japan's Friday decision, Wall Street strategists collectively bet on yen weakness. Text: Strategists including Wells Fargo and Citigroup expect the yen to weaken, anticipating that the Bank of Japan will disappoint investors with a less hawkish stance than the market expects after Friday's meeting. Strategists are bearish on the yen, with Citi believing the yen could fall to 159 against the dollar in the coming weeks. As of press time, the yen was roughly flat against the dollar at 156.02. Swap traders have almost fully priced in a 25-basis-point rate hike by the Bank of Japan on Friday. Market focus is now more on BOJ Governor Kazuo Ueda's remarks after the decision for clues on the central bank's subsequent policy path, with the market expecting more rate hikes before year-end. Wells Fargo strategist Chidu Narayanan wrote in a Thursday report that "the bar is high for the BOJ to meet these market expectations, and even harder to exceed them," adding that "the risk is skewed toward a more dovish outcome than what is priced in." Yen Faces Reversal Risk After Intervention-Driven Rebound Earlier, the yen had weakened after the Federal Reserve delivered its first rate hike in three years on Wednesday and Chair Warsh hinted the central bank would continue raising rates in its fight against inflation. This reversal in the yen came after a sharp rally earlier this month, when the yen rose to its strongest level since mid-February and broke above the high set after a rare joint U.S.-Japan intervention to buy the yen in late July. In recent years, the yen has been under persistent pressure, mainly due to the huge interest rate differentials with other major economies. Citigroup strategist Daniel Tobon said in a Thursday report that while the yen faces short-term downside risk if the BOJ fails to meet market expectations, he believes recent policy developments are part of a broader "paradigm shift" that could drive the yen stronger in the long run. "Those really big concerns we had about the yen are slowly shifting in the right direction," Tobon said. ING G10 FX strategy head Chris Turner expects the yen to depreciate to the 157 or 158 level if the BOJ fails to signal more rate hikes. Elsewhere, ABN AMRO senior FX strategist Georgette Boele expects the yen to strengthen in the second half of 2027, when she anticipates the Fed and the European Central Bank will cut rates. For now, however, she expects the yen to languish around the 154 level against the dollar through the first quarter of 2027. "We expect higher energy prices to temporarily interrupt the yen's recovery," she said.