In the New York session, USD/JPY extended its gains while briefly holding above ¥158, moving toward the 200-day moving average. At the same time, market participants have pointed to positioning as suggesting that USD/JPY could test ¥160 again.
Around midday New York time, USD/JPY paused its advance but held above ¥158, then extended its gains to around ¥158.40 as US Treasury yields and the dollar strengthened further today. The pair continues to test the 200-day moving average.
Market participants have begun to suggest that USD/JPY could test ¥160 again. Although the pair fell sharply in early September, some also believe that the downward momentum has now faded.
Regarding the backdrop to the yen's appreciation, some have pointed to Treasury Secretary Bessent's suggestion of asymmetric information about the Bank of Japan's future policy as the catalyst. The BOJ subsequently raised interest rates in line with that suggestion, but did not strongly signal any urgency regarding its future monetary policy. There have also been indications of renewed interest in yen carry trades exploiting interest-rate differentials.
Volatility in currency pairs involving the yen remains elevated among G10 currencies, and funds maintaining yen shorts may be increasing hedges against a sharp rebound.