Today’s Market Outlook
8 September 2026
USD/JPY Plunges into the 152 Range
Continued Yen-Strengthening Risks and Short-Term Oversold Conditions Collide
■ Market Summary
The dollar-weakness and yen-strengthening trend that has continued since the latter part of last week is accelerating further.
During yesterday’s London session, USD/JPY broke below the 155.30 area that had provided support last week, followed by the psychological 155.00 level, accelerating the sell-off.
Today, buying interest just below 154 also gave way, and the pair broke below 153 before midday in Tokyo, falling to around 152.89. It then saw some short covering due to oversold conditions, but the rebound has lacked momentum and the upside remains heavy.
USD/JPY has fallen by around ¥7.50, from 160.39 last Monday to 152.89 today.
The yen carry-trade unwind remains the main market driver. However, the scale of the decline in a short period means concerns about continued yen strength are now competing with the risk of a rebound from oversold conditions.
■ Why the Yen Is Continuing to Strengthen
Several factors are contributing to the current yen strength.
・Expectations of further Bank of Japan rate hikes
・Expectations of a narrowing U.S.-Japan interest-rate differential
・Intervention concerns that intensified above 160
・The unwinding of short-yen positions
・Higher FX volatility
・Continued dollar weakness
・Instability in equity markets
Yen carry trades in particular depend on low interest rates and low volatility.
When USD/JPY falls sharply in a short period and volatility rises, FX losses can easily exceed the return earned from the interest-rate differential. As a result, the closing of short-yen positions is generating further yen buying.
■ USD/JPY
USD/JPY has fallen to around 152.89 and is seeing only modest short covering.
On the downside, the year-to-date low around 152.10 is an important medium-term level.
Key downside levels are as follows.
・153.00: Psychological threshold
・152.89: Today’s low
・152.10: Year-to-date low
・152.00: Psychological threshold
If USD/JPY falls below 152.89 again, the likelihood of a test of the year-to-date low near 152.10 will increase. A clear break below 152.10 and 152.00 could extend the yen-strengthening trend further.
On the upside, 154.00 is the first rebound target.
Key upside levels are as follows.
・154.00: Initial rebound target
・155.00: Psychological threshold
・155.30: Support level through last week
The first question is whether USD/JPY can recover 154.00. If it can then reclaim 155.00–155.30, it will be easier to conclude that short-term downward pressure has eased.
Conversely, if selling on rallies caps the pair below 154.00, the yen-strengthening trend is likely to remain intact and USD/JPY may retest the 152 range.
■ Rebound Risk from Oversold Conditions
USD/JPY has fallen by around ¥7.50 in a short period, leaving the market clearly overstretched.
Even today, the pair has fallen by around ¥1.50 from its high, creating conditions where profit-taking on yen-long positions and short covering in dollar positions can emerge more easily.
However, oversold conditions alone do not mean that a market bottom has formed.
As long as the yen carry-trade unwind continues, rebounds are likely to attract selling on rallies. To identify a bottom, it will be necessary to see at least a recovery of 154.00 followed by higher lows.
There are few major data releases today, so position adjustment rather than new fundamental news could generate a larger rebound.
■ U.S. Market Participation
The U.S. market was closed yesterday for Labor Day, so U.S. investors will return to the market in full today following the long weekend.
The key question is whether U.S. investors view the sharp USD/JPY decline as the start of a new yen-strengthening trend or as a short-term overshoot that warrants dollar buying.
If U.S. investors continue to reduce short-yen exposure, the decline toward 152.10 is likely to intensify.
On the other hand, if profit-taking after the sharp decline or dollar buying emerges, USD/JPY may rebound toward 154.00.
It will be important to see not only the opening of the New York session, but whether yen buying continues thereafter.
■ JPY Crosses
JPY crosses such as EUR/JPY and GBP/JPY are also declining in line with USD/JPY.
They have rebounded from the lows recorded around midday in Tokyo, but as with USD/JPY, the rebound remains limited.
If USD/JPY holds in the 153 range and recovers toward 154.00, short covering may also develop in yen crosses.
Conversely, if USD/JPY is capped below 154.00 and declines back into the 152 range, yen crosses are also likely to test further downside.
For yen crosses, in addition to yen movements, it will be important to assess whether U.S. and European equity markets stabilize.
■ EUR/USD and GBP/USD
EUR/USD and GBP/USD are likely to remain calmer than USD/JPY and the yen crosses.
EUR/USD in particular is likely to see a wait-and-see tone ahead of Thursday’s ECB meeting.
If the ECB emphasizes inflation concerns, the euro may be bought. If it places greater emphasis on concerns over an economic slowdown, euro selling may emerge.
Until then, EUR/USD is likely to trade in a limited range while remaining sensitive to broader dollar movements.
■ Key Points to Watch
・Whether USD/JPY falls below 152.89 again
・Whether it tests the year-to-date low near 152.10
・Whether it can recover 154.00
・Whether it can reclaim 155.00–155.30
・Whether the yen carry-trade unwind continues
・Whether U.S. investors returning from the holiday move to buy yen
・U.S. equities and long-term U.S. Treasury yields
・Whether selling on rallies continues in yen crosses
・Euro movements ahead of Thursday’s ECB meeting
■ Summary
USD/JPY has fallen by around ¥7.50, from 160.39 last Monday to 152.89 today.
Yen-strengthening pressure driven by the yen carry-trade unwind remains strong. However, the extent of the decline in a short period means short-term rebound risk from oversold conditions also requires attention.
On the downside, 152.89 and the year-to-date low near 152.10 are key levels. On the upside, 154.00 is the main level to watch.
If USD/JPY cannot recover 154.00, the yen-strengthening trend is likely to continue. A clear break below 152.10 could accelerate the decline further.
Conversely, if USD/JPY recovers 154.00 and moves back into the 155 range, short-term adjustment after the sharp decline is likely to broaden.
From here, the market will assess whether U.S. investors returning from the long weekend carry forward the yen-strengthening trend or instead move to buy back the dollar after the sharp decline.
