Recent hawkish repricing of Federal Reserve policy, including the September 2026 rate hike to the 3.75-4.00% range and further increases priced in, has sustained a wide U.S.-Japan yield differential that supports USD/JPY near 157-158. The Bank of Japan’s own September hike to 1.25%—its highest in decades—reflects gradual normalization amid persistent core inflation above 2%, yet the gap remains elevated, bolstering carry-trade appeal. Coordinated intervention risks have repeatedly capped advances toward 160, as seen in July-August actions, while political signals from Prime Minister Takaichi introduce uncertainty over the pace of future BOJ tightening. Key near-term catalysts include upcoming U.S. payrolls, CPI releases, and central-bank communications that will shape market-implied odds for year-end levels.