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JPMorgan
2026-09-04 02:31:11

JPMorgan warns USD/JPY break below 155 could trigger yen-short unwind and send pair toward 142-146

JPMorgan has warned that a break below 155 in USD/JPY could trigger a concentrated unwind of roughly 16 trillion to 17 trillion yen in outstanding short-yen positions, equivalent to about $102.6 billion. According to strategists including Junya Tase, recent price action suggests large yen shorts may not have been fully cleared, raising the risk that selling could accelerate if the pair slips through that level. In that scenario, the bank said USD/JPY could theoretically fall into the 142-146 range. The pair earlier touched 160.39 this week before retreating to around 155.30, while the yen was on track for a roughly 2.7% weekly gain against the dollar, its best showing since July. JPMorgan said the move has been driven by rising expectations for further Bank of Japan rate hikes, speculative short covering, and stronger hedging demand from domestic Japanese investors. Swap markets are now almost fully pricing in a 25-basis-point BOJ hike this month and see about an 80% chance of another increase in December. Still, JPMorgan said expectations around the BOJ and GPIF portfolio reallocation may be overstretched and that a sharp break below the 155-165 range is not its base case. Japan’s top FX official Atsushi Mimura also said he was "not satisfied" with current yen moves and that Japan stands ready to respond to market volatility. Bank of America is currently short USD/JPY with a target of 149, while TD Securities remains moderately bearish on the dollar for the rest of the year.

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