Marina Lubimova
The move follows a sharp appreciation of the yen in recent weeks. USD/JPY traded above 160 at the start of September and briefly fell below 153 this week, putting the pair near its lowest levels in roughly seven months.
What is moving USD/JPY?
The immediate rebound in the dollar comes as traders reassess the outlook for U.S. and Japanese interest rates.
Markets are waiting for U.S. producer-price data on Thursday and CPI on Friday, which could influence the Federal Reserve's September 15–16 decision. Following stronger U.S. employment data, traders are pricing roughly a 60% probability of a Fed rate increase this month.
At the same time, expectations for tighter policy from the Bank of Japan have strengthened. The yen has gained more than 6% since the joint U.S.-Japan currency intervention in late July, while investors are positioning for a potential BOJ rate increase next week.
USD/JPY: the bigger move
The latest 0.5% rise to 154.3 is relatively small compared with the pair's September swing:
- September 1: ~160.2
- September 4: ~156.3
- September 7: ~153.8
- September 9: ~153.6
- Latest move: as high as 154.3
That leaves USD/JPY roughly 3.7% below its September 1 level, despite the latest dollar rebound.
The key question is whether the move above 154 develops into a broader dollar recovery or remains a correction within the yen's recent rally. The answer will depend heavily on U.S. inflation data and the upcoming Fed and BOJ decisions.
JPMorgan strategists have argued that it is still too early to abandon a broader 155–165 USD/JPY range, noting that higher U.S. rates could preserve part of the yield advantage that has supported the dollar against the yen.
Marina Lubimova
