USD/JPY broke below 155 on September 7 on its third attempt, ending a period in which the level had withstood two intervention-driven defenses — during Golden Week and again at the end of July — before becoming entrenched as a major psychological marker. By early trading on September 8, the pair had slipped below 154.50, according to an analysis by Investing.com.
The move gained significance because the level around 155.50, which had marked the lows after both prior intervention episodes, finally gave way. Markets tend to accumulate positioning around levels defended multiple times, and when those floors break, the resulting unwinding can accelerate moves beyond what fresh fundamentals alone would explain, the analysis noted.
Three forces appear to be converging in favor of the yen. The first is mounting pressure from Washington. U.S. Treasury Secretary Scott Bessent told reporters at the G20 that Japan should move away from its reflationary policy stance and expressed confidence that Tokyo would take steps producing a stronger yen. The comments came as Japanese ministries submitted fiscal-year-2027 budget requests totaling roughly JPY143 trillion, well above the current fiscal year’s initial budget of around JPY122 trillion, underscoring the continuation of an expansionary fiscal backdrop. Bessent is reported to have voiced similar frustrations during a May visit to Japan, and markets continue to believe the coordinated intervention at the end of July was carried out with U.S. cooperation.
The second driver is the Bank of Japan. Bessent met BOJ Governor Kazuo Ueda on the sidelines of the G20, with the U.S. Treasury later stressing the importance of monetary-policy communication and avoiding excessive exchange-rate volatility. Ueda subsequently kept the September 17–18 meeting firmly in play, saying a rate hike would be discussed thoroughly at every meeting, including the next one. BOJ board member Hajime Takata added that the central bank should be prepared to raise rates “nimbly,” though he later pushed back against expectations for a larger move at the upcoming meeting. The combined effect was a market reassessment: the policy gap between the U.S. and Japan may be narrowing from both sides, undermining the carry-trade foundation that had supported higher USD/JPY throughout the summer.
A third, more uncertain factor is speculation that the Government Pension Investment Fund could shift its asset allocation. GPIF manages roughly JPY300 trillion, meaning even a modest reallocation toward domestic financial assets could meaningfully affect the yen. Finance Minister Satsuki Katayama raised the prospect in July, and discussion intensified after the GPIF Board of Governors met on August 21, with the agenda referencing a Basic Portfolio Review Project Team. The meeting was reportedly the first in August in about seven years, further fueling speculation. No concrete decision has been announced, and details may not emerge for months, but the mere possibility of capital reshoring is carrying weight.
On the dollar side, momentum appears to be fading. The August employment report showed a gain of 162,000 jobs, enough to restore some probability of a Federal Reserve rate hike, yet the greenback’s response was surprisingly muted. Fed officials, including Christopher Waller, have signaled they want to see data from the September 11 release before making a final judgment. Wage growth slowed to 3.1% year over year, continuing a gradual downward trend that tempers inflation-pressure arguments. Meanwhile, President Donald Trump has publicly called for lower rates and threatened trade consequences if the Fed does not cut, adding political headwind to dollar strength.
The analysis cautioned that while the break below 155 is noteworthy, it is too early to declare a full trend reversal. Much of the favorable news for the yen is already embedded in prices, and several assumptions underpinning the move remain untested.
