US Treasury yields have backed up sharply from their late-August lows, particularly at the front end of the curve, as higher energy prices, firmer inflation pressures and rising expectations for a Fed rate hike push borrowing costs higher.
The center of the FX market remains the USD/JPY carry trade and, so far, bulls have held on relatively well. To be sure the pair has pushed down by more than 1,000 pips in the past six weeks which may not sound like buyers are holding the bid, but given the backdrop and the fact that we haven't seen a larger case of unwind, I think credit should be given to the fact that buyers have, so far, responded to pullbacks quite well.
The strong rally in the oil markets provided additional support to the American currency.
USD/JPY Price Forecast: Trades above 153.50 ahead of US inflation; bearish bias remains
USDJPY breaks lower The Japanese Yen (USDJPY) remains pressured as traders expect a rate hike from Japan's central bank. Last week's drop looks set to continue as sellers claim more dominance.
USD/JPY has plunged nearly 7% from the highs, with momentum stretched and major support looming ahead of CPI and next week's.
U.S. dollar is losing some ground as traders worry that debt markets get out of control.
The Japanese yen is extending one of its strongest rallies of the year, pushing the USD/JPY pair down to around 153.61 on Wednesday and bringing the currency to its strongest level against the US dollar since February 2026.
USDJPY managed to resume the drop as traders anticipate a rate hike from the Bank of Japan next week. The market faces support around the 152.00-15 zone while resistance at 155.00-20 could lead to a trading zone here.
USD/JPY falls to seven-month low: What's going on?
USD/JPY fell to 153.50 on Wednesday, leaving the Japanese yen close to its strongest level in almost seven months. The currency is receiving additional support from comments by US Treasury Secretary Scott Bessent, which have made market participants increasingly cautious about betting against the yen.
USD/JPY Price Forecast: Hammer teases rebound after 650-pip slide