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Market Insights > Daily Market Analysis New

USD/JPY Extends Losses as BoJ Rate-Hike Expectations Strengthen the Yen

Published: 8 September 2026,06:06

Daily Market Analysis New

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Key Takeaways:

*USD/JPY extended its decline after breaking below the previous 155.75 support level.

*Japan’s real wages rose 2.4% year-on-year in July, the strongest increase since May 2021.

*Continued intervention risks and carry-trade unwinding are providing additional support for the yen.

Market Summary:

The Japanese yen continued to strengthen, pushing USD/JPY lower as expectations for further Bank of Japan monetary tightening increased.

Recent Japanese economic data have reinforced the case for another rate hike. Japan’s economy expanded at an annualised 1.4% in the second quarter, stronger than the preliminary estimate of 1.1%. Meanwhile, real wages increased 2.4% year-on-year in July, marking their strongest growth since May 2021.

The stronger growth and wage picture suggests Japan’s inflation dynamics are becoming more sustainable, giving the BoJ greater flexibility to continue normalising monetary policy. Markets are now pricing around a 98% chance that the BoJ will raise its policy rate by 25 basis points to 1.25% at its September meeting.

Higher Japanese interest rates would narrow the yield gap between Japan and the United States, reducing the attractiveness of yen-funded carry trades and potentially encouraging further yen buying.

Intervention risk remains another supportive factor. Japan and the US have maintained close coordination on foreign-exchange policy following their joint yen-support operation in July, keeping traders cautious about rebuilding large short-yen positions.

As a result, USD/JPY has extended its losses and the yen briefly strengthened to around 152.89 per dollar, its strongest level since February. The yen has now gained roughly 4.5% from around 160 per dollar since early last week.

With stronger economic data, rising BoJ hike expectations and continued intervention risks all supporting the yen, the fundamental bias for USD/JPY remains tilted to the downside in the near term. However, traders should remain alert to upcoming US inflation data, which could revive Fed tightening expectations and potentially provide some support to the dollar.

Technical Analysis

Bearish USD/JPY chart dated 8th September 2026 showing a down move after a dashed uptrend, with price near a support zone.

USD/JPY, H4

USD/JPY is trading lower after breaking below the previous 156.25 support level, signaling a bearish shift in short-term structure.

Momentum indicators continue to support the downside bias. The MACD is showing increasing bearish momentum, while the RSI at 25 remains below the midline and near oversold territory, suggesting that selling pressure remains dominant despite the risk of a short-term rebound.

If bearish momentum persists, USD/JPY could extend its decline toward the next support level at 152.25, followed by 146.80 if downside pressure intensifies.

However, if bearish momentum begins to fade, the pair may stage a technical rebound and retest the 156.25 resistance level, followed by 159.90 if recovery momentum strengthens.

Resistance Levels: 156.25, 159.90

Support Levels: 152.25, 146.80

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