USD/JPY Analysis: Has the Yen Carry Trade Finally Peaked?
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Key Points:
- The outlook for USD/JPY seems bearish over the next 6–12 months. Topside is capped; structural flows lean the other way.
- Intervention risk remains at around 161–162 (Japan's Ministry of Finance drew a line near 160.2 in 2024). Downside markers: 158, then 155, with 2024 lows near 142 if a genuine unwind develops.
- Near term the carry trade survives, June's hike was too well telegraphed for a panic. The structural turn plays out over two to four quarters.
- The Strait of Hormuz is effectively closed again as of June 21. Independent transit tracking data puts commercial traffic at effectively zero. A durable closure with oil rebounding behind it pushes USD/JPY through 162 and toward 165.
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Japan just raised interest rates to its highest level since 1995. The yen pushed higher anyway and USD/JPY is now trading at its highest level since 2024. That is the real story, a hawkish rate hike that the market barely reacted to. In my view, that alone marks a top in USD/JPY. The two underlying dynamics are moving in opposite directions and the Treasury holdings data is where the more important signal may be emerging. It is still only a clue with no confirmed trend behind it yet, but it is worth paying closer attention to than most of the coverage has.