+36,544 USD
USD/JPY Plunges into the 155 Range
U.S. CPI and Trump Administration Pressure for Rate Cuts Are the Next Focus
Trading Results, 31 August–4 September
Weekly Total: +36,544 USD
■ This Week’s Summary
This week, USD/JPY fell sharply by around five yen from the 160 range into the 155 range, marking a major shift in the yen-weakness trend that had persisted until now.
Early in the week, worsening Middle East tensions, higher oil prices, and rising long-term U.S. yields supported dollar buying and yen selling, pushing USD/JPY up to 160.39.
However, the following factors then converged:
・Expectations of a Bank of Japan rate hike in September
・Expectations of further rate hikes before year-end
・Higher Japanese government bond yields
・Market expectations of yen buying related to the GPIF
・Japanese authorities’ warnings against yen weakness
・Fading expectations of U.S. rate hikes
Together, these factors triggered a rapid unwinding of yen carry trades.
USD/JPY plunged to 155.30.
EUR/JPY also fell from the 185 range into the 180 range, while GBP/JPY declined from the 216 range to below 210. This week’s market was driven less by broad dollar strength or weakness and more by yen buying itself.
The U.S. employment report at the end of the week came in well above market expectations, with prior figures also revised higher.
Normally, this would be a strong catalyst for dollar buying. However, after USD/JPY briefly rose into the upper 156 range, it was pushed lower again.
This price action is highly important.
The market is now shifting toward a phase in which the key question is not simply whether the dollar is strong or weak, but how far the yen carry-trade unwind will continue.
It is becoming increasingly difficult to rely on the simple assumption that strong U.S. data automatically means buying USD/JPY.
This week’s performance was +36,544 USD.
With volatility remaining elevated, the approach next week will be to avoid forced entries and focus only on markets with clear direction.
■ Going Forward
The approach from here will be:
・Avoid casually buying dips in USD/JPY
・Prioritize confirming whether the yen-strengthening trend continues
・Monitor Japanese government bond yields as well as U.S. yields
・Focus on market reactions to comments from Bank of Japan officials
・Monitor pressure from the Trump administration on the Federal Reserve
・Keep position sizes smaller ahead of major events
At present, it is more important than deciding direction solely from economic data to see whether USD/JPY can genuinely rise after the data is released.
FX Strategy Update
7–11 September 2026
Market Outlook
Previous Week’s Trading Performance: +36,544 USD
■ Next Week’s Market Theme
The biggest theme next week is:
Will the USD/JPY yen-strengthening trend continue, or will the pair rebound from the 155 range?
The key catalyst in determining that direction will be the U.S. CPI on 11 September.
However, this time there is an additional factor that makes the usual CPI-driven market more complex.
That factor is pressure from the Trump administration for the Federal Reserve to cut rates.
While the Fed has left open the possibility of further rate hikes depending on inflation, the Trump administration is strongly demanding rate cuts.
This means the market must assess not only whether the Fed wants to raise rates, but also how far the administration may pressure the Fed.
■ U.S. CPI Is the Major Turning Point
Next week’s most important economic release is U.S. CPI.
If CPI exceeds forecasts and strength is also confirmed in services prices and housing costs, the following chain is likely:
Inflation concerns
→ Rising rate-hike expectations
→ Higher U.S. yields
→ Dollar buying
However, caution is needed for USD/JPY this time.
Even if CPI is strong, higher U.S. yields may not automatically push USD/JPY higher if expectations of Bank of Japan rate hikes and the yen carry-trade unwind continue.
Conversely, if CPI is weak:
Fading rate-hike expectations
→ Lower U.S. yields
→ Dollar selling
＋
Yen buying
could combine and accelerate the decline in USD/JPY.
Next week, the direction USD/JPY takes after CPI will matter more than the number itself.
■ USD/JPY Strategy
USD/JPY is undergoing a major shift from the previous market, which was centered on buying dips.
The current downside drivers are:
・Expectations of a Bank of Japan rate hike in September
・Expectations of consecutive rate hikes before year-end
・Higher Japanese government bond yields
・The yen carry-trade unwind
・Concerns over further intervention
・Uncertainty surrounding U.S. rate-hike expectations
Factors supporting the downside include:
・The still-wide U.S.-Japan interest-rate differential
・Japanese fiscal concerns
・Safe-haven dollar demand driven by Middle East tensions
・Short covering after the sharp decline
A rebound from the 155 range is entirely possible in the short term.
However, if the rebound stalls in the upper 156 range or the 157 range and turns lower again, it may indicate that market control has fully shifted to the yen-buying side.
Next week, the approach will not be to buy simply because USD/JPY has fallen. The quality of any rebound needs to be assessed.
■ Trump Administration Pressure for Rate Cuts
Close attention should also be paid to comments from President Trump next week.
If the administration intensifies its demands for Federal Reserve rate cuts, the short-term effect could be:
Lower U.S. yields
→ Dollar selling
However, if concerns rise over halted trade or stronger tariffs, the opposite force could also emerge:
Higher import prices
→ Renewed inflation
→ The Fed finds it harder to cut rates
Moreover, if concerns about Federal Reserve independence intensify, there is a need to remain alert to a “triple sell-off” in U.S. Treasuries, U.S. equities, and the dollar.
Next week, Trump’s comments should not be treated automatically as a dollar-selling catalyst. It will be important to determine which transmission channel the market is pricing in.
■ Bank of Japan Strategy
On the Japanese side, expectations of further Bank of Japan rate hikes will be the main focus.
If Bank of Japan officials strongly signal:
・Concern about rising prices
・Concern about yen weakness
・The need for further rate hikes
yen buying could strengthen further.
Conversely, if they emphasize concern about rapid market moves or economic conditions, heavily built-up yen-long positions could unwind temporarily.
There are now more occasions when comments from the Bank of Japan have a greater impact on USD/JPY than comments from the Federal Reserve.
■ EUR/USD Strategy
EUR/USD will be focused on the ECB meeting and U.S. CPI.
Even if the ECB raises rates, the key issue is what comes next.
If the ECB signals continued tightening, the euro is likely to be bought.
Conversely, if it signals a wait-and-see approach following this rate hike, the market may interpret it as an exhaustion of positive factors and sell the euro.
However, EUR/USD as a whole will remain heavily influenced by U.S. CPI and U.S. yields.
Buying dips may be considered while dollar selling continues, but chasing highs should be avoided.
■ GBP Strategy
The pound will be focused on UK GDP.
If the economy proves more resilient than expected, expectations of prolonged Bank of England tightening could support the pound.
Conversely, if an economic slowdown is confirmed, the scope for further rate hikes may narrow and lead to pound selling.
Against the yen, the pound will be strongly affected by the ongoing yen-strengthening trend, so decisions should not be based on pound-specific factors alone.
■ AUD and NZD Strategy
The Australian dollar is supported by the RBA’s hawkish stance.
Meanwhile, expectations that RBNZ tightening has ended make the divergence between the Australian and New Zealand dollars more likely to widen.
For this reason, focus will remain on relative-currency opportunities such as AUD/NZD next week.
When broad dollar direction is unstable, relative monetary-policy differences may provide clearer trading opportunities.
■ Gold Strategy
Gold will remain an important market to monitor.
Lower U.S. yields would be supportive for gold.
In addition, demand for gold as a safe haven may increase if concerns grow over:
・Federal Reserve independence
・Policy uncertainty under the Trump administration
・Middle East developments
・Fading confidence in the dollar
On the other hand, if CPI is strong and U.S. yields rise sharply, short-term correction risk should be monitored.
The basic approach is to consider buying dips while monitoring the reaction in U.S. yields.
■ Basic Strategy for Next Week
Next week, it will be important to recognize that watching the dollar alone is not enough. The strength of the yen must also be monitored.
The basic strategy is:
・Avoid casual USD/JPY dip buying
・Assess the strength of any rebound from the 155 range
・Keep positions light around U.S. CPI
・Pay close attention to Bank of Japan officials’ comments
・Monitor U.S. Treasury and Japanese government bond yields together
・Watch Trump administration pressure on the Federal Reserve
・Prioritize markets with clear trends, such as gold
■ Final Scenarios
There are two main scenarios for next week.
Scenario 1: Continued Yen Strength
If U.S. CPI is weak and the Bank of Japan maintains a hawkish stance:
Lower U.S. yields
＋
Expectations of Bank of Japan rate hikes
＋
Further yen carry-trade unwind
could combine and push USD/JPY to test lower levels.
In this case, attention should focus on price action after a break below 155.
Scenario 2: USD/JPY Rebound
If U.S. CPI is strong and expectations of U.S. rate hikes increase again, USD/JPY could rebound sharply.
Even in that case, however, the pair is not expected to move straight back toward 160.
There are now many yen-buying factors in place, making rallies more likely to attract selling than before.
The basic approach next week is:
Do not rush to buy dips in USD/JPY. Confirm whether the yen-strengthening trend has genuinely ended.
U.S. CPI, the Bank of Japan, and the Trump administration.
These three factors will be monitored while focusing only on markets where direction becomes clear.
■ Postscript: What Ultimately Sets Traders Apart Is Mental Flexibility
As you trade for a long time, your knowledge and experience naturally accumulate.
That is a major advantage.
At the same time, however, the more experience you gain, the easier it is to become attached to assumptions such as:
“If this happens, the market will move this way.”
The human brain is thought to maintain memory, concentration, and cognitive flexibility through new and varied stimulation, such as puzzles and card games, learning a new language, music, or acquiring a new skill.
I believe this is highly relevant to traders.
In markets, an approach that worked until yesterday may not work today.
The interest-rate theme changes.
Central-bank stances change.
Geopolitical risk can rise suddenly.
Relationships among equities, bonds, commodities, and crypto assets can also change.
In other words, the market constantly demands that we update our thinking.
The danger is becoming too attached to past success.
“The market rebounded from here last time.”
“This chart pattern means buy.”
“This development means dollar strength.”
When we have experience, it is natural to want to make those judgments.
However, what matters in markets is not producing the same answer as in the past. It is producing the answer that fits the market now.
To do that, we need to keep our thinking flexible.
Watch currencies you do not usually follow.
View charts across different timeframes.
Check equities, interest rates, and commodities as well.
Review past trades.
Consider scenarios that run counter to your own view.
All of these are valuable forms of mental training for traders.
It is also said that explaining what you have learned to someone else can deepen your own understanding.
For me, reviewing the market each week and putting it into words helps me reassess:
“Why did it rise?”
“Why did it fall?”
“Was my judgment correct?”
This is not merely the work of producing a weekly report. It is also a process of sharpening my own market perspective.
To remain profitable in trading over the long term, knowledge alone is not enough.
The ability to embrace change.
The ability to admit mistakes.
And the flexibility to revise yesterday’s view today.
Perhaps the greatest danger in markets is not what we do not know, but believing that we already know enough.
Next week as well, I intend to use past experience as a strength while remaining free from it—watching the market as it is and updating my judgment with flexibility.
