The yen strengthened ahead of a likely interest rate hike in Japan this week, a week packed with central bank decisions and data from the US.

The yen continued to rise after the Bank of Japan reported that most companies surveyed by it expect wage increases in fiscal 2026 at about the same pace as this year.

A separate survey showed that business sentiment among major Japanese manufacturers reached a four-year high.

The rate hike on Friday is almost fully priced in, giving the yen an advantage over the dollar, whose position may weaken due to expectations of new rate cuts in the US. Against this background, the pair USD/JPY is under pressure and the market is preparing to test the recent local minimum.