USD/JPY reaches inflexion point as critical support breaks
USD/JPY has fallen below a major support level as markets increase expectations for further Bank of Japan rate hikes.
Founder, Mott Capital Management
USD/JPY has fallen below technical support at ¥155 as markets increase bets on a Bank of Japan rate hike at the upcoming monetary policy meeting on 18 September. Markets are currently pricing in two rate hikes by January 2027, which would take the overnight interest rate to 1.5%.
This is the first time USD/JPY has traded below ¥155 since February 2026, despite multiple attempts to break support since then. A close below ¥155, with follow-through, could suggest that USD/JPY has further to decline and may result in a test of support at ¥152.25.
The one factor working against a further move lower in the short term is that USD/JPY is now oversold, trading below its lower Bollinger Band, with the relative strength index (RSI) below 30. This suggests the pair may be due for either a rebound or a period of sideways consolidation. A rebound could see USD/JPY test its 20-day moving average.
USD/JPY daily, February 2026 – present
Source: TradingView, 7 September 2026
However, a close below support at ¥155 with follow-through would turn that former support level into resistance, which could be difficult for USD/JPY to move back above given how strong the level had previously been. The move lower may therefore signal a longer-lasting shift in trend, putting USD/JPY at a potential inflexion point.
Yen weakness builds as USD/JPY nears key resistance
USD/JPY is pushing back towards 159.50, a level that acted as support and resistance before Japan's late-April intervention. If that barrier gives way, the pair could retest 160.50, while the Bank of Japan's delayed policy meeting and still-elevated oil prices continue to leave the yen exposed.
The yen faces a defining week as the BoJ decision nears
The Bank of Japan's policy decision on 16 June could define the yen's next move, with markets pricing more than a 90% chance of a rate rise to 1% and USD/JPY already trading above 160. The chart still leaves room for more upside in the pair, but lower oil prices and any hawkish surprise from the BoJ could yet give the yen some support.
USD/JPY tests July 2024 high as rate expectations diverge
USD/JPY is approaching the July 2024 high near 161.75 as markets look past the latest Bank of Japan rate increase and continue to price wide US-Japan rate differentials. A break above that area could keep the dollar-yen uptrend intact, but the risk of renewed Japanese intervention remains the main counterweight.