USD/JPY Eyes 149 as Japan and U.S. Step In to Support Yen
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Key Points:
- July 30, 2026: the yen moved 163.86 to 159.47 on the Fed's noon fixing, 4.39 in a session. July 31: the New York Fed bought yen, and the BoJ held 1.0% by 8-1 with Takata Hajime dissenting for 1.25%.
- Through all of it the gap stayed at 262.5bp. A Fed hike and a BoJ hike in September leave it at 262.5bp.
- A short-yen position collects 0.219% a month. July 30 alone annualises to 42.5%. The week to August 3 travelled 4.38%, twenty months of that income.
- The BoJ meets September 17-18, two days after the FOMC. My call is USD/JPY toward 148-150 by mid-October from 156.68. A daily close above 163.86 retires it, and so does a September 18 hold with the vote unchanged.
Washington joined Tokyo in buying yen on July 31, the pair fell 4.4% in a week, and the reading settling in now is that the authorities spent their credibility for a few yen. Below, I’ll lay out why the 2024 tape says otherwise, and why what kills a carry book isn’t the size of the rate gap. It’s what a week like that does to the volatility the gap is measured against.