+5,328 USD
Double Rate Hikes from the Fed and BOJ Ahead: Will USD/JPY Break Below ¥152, or Will the Yen Rally Unwind?
Trading Results, 7–11 September
Weekly Total: +5,328 USD
This Week’s Summary
This week, the yen strengthened further, driven by yen carry-trade unwinding and expectations of a Bank of Japan rate hike.
USD/JPY fell from the ¥156 range at the start of the week to ¥152.89.
The main drivers were:
・Expectations of a BOJ rate hike in September
・Expectations of further BOJ rate hikes before year-end
・Unwinding of yen carry trades
・Warnings from U.S. Treasury Secretary Bessent against excessive yen weakness
・Concern over possible intervention by Japanese authorities
This produced a market in which rallies were consistently sold.
In the latter half of the week, USD/JPY rebounded into the mid-¥154 range as U.S. PPI exceeded expectations, oil rose above $100, and U.S. long-term yields increased.
Core CPI also exceeded market expectations on a monthly basis, briefly lifting the implied probability of a September FOMC rate hike above 90%.
Even so, USD/JPY rose only to ¥154.48 before falling sharply back into the lower ¥153 range.
The fact that USD/JPY could not sustain gains despite strong U.S. inflation data and heavily priced-in rate hikes highlights the strength of current yen-buying pressure.
Meanwhile, expectations that GPIF would expand investment in domestic bonds have eased for now. The present yen strength therefore appears to be driven not by a single factor, but mainly by:
BOJ policy normalisation
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Yen carry-trade unwinding
Weekly performance was +5,328 USD.
It was not a large gain, but we were able to remain profitable in a difficult market where direction changed repeatedly.
This week once again reinforced the importance of adjusting when market conditions change, even if the initial directional view proves incorrect.
Forward Strategy
The approach going forward will be:
・Monitor oil primarily in the direction of the prevailing trend
・Do not chase BTC at the initial move; prioritise re-entry after direction is confirmed
・Avoid casual NZD longs while its weakness persists
・Prioritise pairs with clear relative currency strength, such as EUR/CAD
・Be cautious with countertrend USD/JPY trades until direction becomes clearer
・Reduce position size around the FOMC and BOJ meetings
FX Strategy Update
Market Outlook for 14–18 September 2026
Previous Week’s Performance: +5,328 USD
Next Week’s Market Theme
The central theme next week is:
After both Japan and the United States raise rates, which central bank will prove more hawkish?
The market’s base case is an unusual double rate hike:
A 0.25% hike at the FOMC
A 0.25% hike from the BOJ
However, the direction of USD/JPY will not be determined by the hikes themselves.
Because both moves are partly priced in, the key question is:
What comes next?
For the FOMC, the focus will be on further rate hikes before year-end.
For the BOJ, the focus will be on additional hikes in October and December.
The difference in the pace of future policy tightening could move USD/JPY sharply next week.
FOMC Strategy
A 0.25% rate hike is the central scenario for the FOMC.
However, we should be cautious about chasing the dollar simply because rates are raised.
The market will focus on:
・The FOMC statement
・Fed Chair Warsh’s press conference
・Economic projections
・Interest-rate projections
・The number of further hikes expected this year
The most dollar-positive outcome would be a message of:
A rate hike now, with further rate hikes still necessary.
This could lead to:
Higher U.S. yields
→ Dollar buying
→ A rebound in USD/JPY
Conversely, if the Fed signals that it will pause to assess conditions after this hike, a sell-the-fact dollar reaction is possible.
An unexpected decision to hold rates steady would be a major surprise and could trigger rapid dollar selling.
BOJ Strategy
A 0.25% rate hike is also the central scenario for the BOJ.
However, the key issue is not the hike itself, but how Governor Ueda explains the next move.
If Governor Ueda emphasises:
・Concern over upside inflation risks
・Higher import prices caused by yen weakness
・A virtuous cycle between wages and prices
・Scope for further hikes in October and December
Yen buying could strengthen further.
Conversely, if the message is:
We will make careful decisions while monitoring future economic data,
then the accumulated yen-long positions could unwind.
Because market expectations have shifted considerably in a hawkish direction, traders should also be alert to a scenario in which the yen is sold even after a rate hike.
USD/JPY Strategy
There are currently two major scenarios for USD/JPY.
Scenario 1: A Break Below ¥152
The strongest yen-appreciation scenario would be:
FOMC: Cautious after a rate hike
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BOJ: Signals further rate hikes
In this case:
A pause in rising U.S. yields
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Higher Japanese yields
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Yen carry-trade unwinding
could combine to push USD/JPY below ¥152 and toward lower levels.
Given that USD/JPY has not been able to sustain gains even after strong U.S. data, the risk of an expanded move lower should be taken seriously.
Scenario 2: Yen-Rally Unwinding
Conversely, if the outcome is:
FOMC: Clearly signals further rate hikes
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BOJ: Cautious about future tightening
the market could reverse sharply.
Yen-long positions have accumulated over a short period. If the following factors coincide:
Higher U.S. yields
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Reduced expectations of further BOJ tightening
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Rebuilding of yen-short positions
USD/JPY could rebound sharply.
For that reason, the move into the ¥152 range should not be treated as a reason to chase the downside.
EUR/USD Strategy
The euro is supported on the downside by the ECB’s hawkish stance.
Further ECB rate-hike expectations remain in the market. If the Fed turns cautious after raising rates, EUR/USD may have room to rise.
However, if the FOMC clearly signals further hikes, higher U.S. yields could push EUR/USD lower again.
Next week, the priority will be to assess the dollar’s direction after the FOMC rather than focusing on the euro alone.
GBP Strategy
Sterling faces a concentration of important events:
・UK employment and wage data
・UK CPI
・The Bank of England policy decision
The base case is for the BOE to hold rates steady. However, strong wage or inflation data could increase the number of policymakers supporting a rate hike.
This would be likely to support sterling.
Conversely, if economic deterioration becomes clearer, sterling could weaken on the view that additional tightening will be difficult even if inflation remains high.
AUD Strategy
The Australian dollar remains supported by the RBA’s hawkish stance.
Governor Bullock’s parliamentary testimony on the 18th will be important in determining whether concern over inflation and scope for further hikes remain intact.
However, with the FOMC and BOJ likely to dominate next week, it is preferable to assess AUD strength through pairs such as AUD/USD rather than taking an aggressive directional view against the yen.
NZD Strategy
NZD remains relatively weak.
Markets are focused on the possibility that the RBNZ’s tightening cycle has ended, leaving the currency with less policy support than other major currencies.
Avoid casual long positions while this weakness persists.
In particular, weak New Zealand GDP could intensify selling pressure.
CAD Strategy
Canadian CPI is the main focus for the Canadian dollar.
The BOC’s hawkish stance supports the currency on the downside, while U.S.-Canada trade friction and slowing employment cap its upside.
Oil prices will also be important.
Higher oil combined with strong CPI would favour CAD buying.
Conversely, a decline in oil alongside weak CPI would make the bearish direction clearer.
Pairs with clear relative strength, such as EUR/CAD, will remain in focus.
Oil Strategy
Oil remains an important market to monitor.
Prices have risen above $100, with Middle East developments and sanctions on Iran shaping the outlook.
Next week, attention will also turn to the details of U.S. Treasury Secretary Bessent’s sanctions against Iran.
If supply concerns intensify, the uptrend may continue.
Conversely, if geopolitical risk eases, sharp profit-taking from elevated levels is possible.
Rather than attempting to predict the market and trade against it, the priority is to follow a confirmed trend.
BTC Strategy
Do not chase the initial BTC move.
During weeks packed with major events, markets can move sharply immediately after policy announcements before reversing direction.
Rather than jumping into the first move after the FOMC, focus on:
Direction confirmation
→ Pullback
→ Re-entry
This will be the preferred approach.
Core Strategy for the Week
Next week will be one of the most important weeks of the year.
The core strategy is:
・Avoid large positions ahead of the FOMC
・Do not chase the FOMC rate hike itself
・Focus on Governor Ueda’s press conference rather than the size of the BOJ hike
・Prepare for both a break below ¥152 and a reversal of yen strength
・Prioritise trend-following in oil
・Target BTC’s second move rather than the initial reaction
・Avoid buying NZD while weakness persists
・Prioritise markets with clear relative strength, such as EUR/CAD
・Concentrate on markets whose direction is confirmed after U.S. and Japanese policy announcements
Final Scenario
Next week may bring the highly unusual situation of double rate hikes from Japan and the United States.
However, the key question is not which central bank raises rates. It is which central bank is likely to continue raising rates afterward.
If the FOMC becomes cautious after a hike while the BOJ signals further tightening, a break below ¥152 in USD/JPY will come into view.
Conversely, if the Fed remains open to further hikes while the BOJ proves less hawkish than markets expect, rapid unwinding of yen strength may occur.
The yen has strengthened substantially over a short period, so this is not a market for committing to only one direction.
The basic approach next week is:
Make one assessment after the FOMC, then reassess after the BOJ.
Rather than trying to navigate two major policy events with one fixed scenario, assess the market’s reaction after each announcement and adapt flexibly toward the direction offering the clearest advantage.
Afterword: Markets and Diets Both Resist a Single “Villain”
When people think about dieting, many assume:
Carbohydrates make you gain weight.
In reality, however, it is possible to reduce body fat without cutting carbohydrates to an extreme, by choosing foods carefully and managing total intake.
For example, foods such as:
Beans
Oatmeal
Whole grains such as brown rice
Fruit
Potatoes
Sweet potatoes
contain fibre and nutrients, and can be satisfying sources of carbohydrates.
What matters is not treating all carbohydrates as inherently bad. It is looking at what you eat, how much you eat, and in what form.
The same principle applies to markets.
In trading, when we find a simple theme such as:
The dollar is strong.
The yen is weak.
Higher yields mean a stronger dollar.
it is tempting to explain the entire market through that one idea.
In reality, however, markets are rarely that simple.
Even with a dollar-positive catalyst, it may already be priced in.
Even if yields are rising, equity markets or geopolitical risk may alter capital flows.
Even if USD/JPY is rising, EUR/USD or AUD/USD may reveal an entirely different market theme.
In other words, treating one factor as the single “culprit” can make us lose sight of what the market is truly doing.
In diet, the key is not eliminating carbohydrates completely. It is seeing the balance of the whole diet.
In trading, the same applies. Rather than believing only one factor, it is important to assess yields, relative currency strength, technicals, positioning, news, and market sentiment together.
There is another interesting point.
The same potato can have a very different effect depending on how it is prepared. Boiled or baked potatoes are not the same as French fries.
Markets work the same way.
Even with the same piece of news, the outcome can differ greatly depending on:
The price level at which it appears
The timing of the market’s reaction
How the market chooses to interpret it
Trading is not about eliminating one factor completely.
It is about deciding what to use and what to avoid, depending on conditions.
And above all, it is about seeing the balance of the whole market.
Next week as well, rather than reacting to a single headline, we will assess the broader market environment and continue to make flexible decisions step by step.
