**Market-implied odds for USD/JPY to close 2026 in the 150-160 range reflect the dominant influence of the persistent US-Japan interest rate differential and elevated Treasury yields.** The Federal Reserve’s September hike to a 3.75-4.00% target range, with further tightening still priced in by many participants, continues to support the dollar against the yen despite the Bank of Japan’s move to 1.25%. Recent coordinated intervention warnings and checks by Japanese authorities have capped upside momentum above 160, while gradual BoJ normalization and yen undervaluation provide a floor. With only weeks remaining until year-end, traders are weighing upcoming October central bank decisions and inflation data as key swing factors that could shift positioning within the favored 150-160 band.