USDJPY is on thin iceUS Dollar/Japanese YenFX:USDJPYStanislav_Bernukhov_ExnessOverview USDJPY continues to trade in a strong long-term uptrend, supported by reduced demand for safe havens and moderating U.S. growth momentum. However, the current structure may be forming a strategic reversal zone, with a potential medium-term downside target near 149, aligned with the 200-day moving average. This idea is expected to unfold over several weeks or even months rather than within a single trading week. Macro Foundation Behind the Idea 1. Yen as a Carry Trade Currency The JPY remains the lowest-yielding major currency and is widely used in carry trades. As Japan gradually lifts interest rates (starting from 2024), carry trades become increasingly risky. Japan’s inflation, previously cyclical and subdued, has turned upward again after reaching a local bottom around August 2025. This keeps probabilities of additional BOJ rate hikes elevated. 2. Bond Market Signals Japan’s 30-year government bond yields have surged to 3.4%, the highest level ever recorded. Rising long-term yields indicate tightening conditions and strengthen the case for a stronger yen. 3. BOJ Communication Turns Hawkish Governor Ueda recently stated that the BOJ will weigh the “pros and cons” of another rate hike at the upcoming meeting — a clearly hawkish tone. Historically (July 2024 and January 2025), similar patterns preceded significant USDJPY declines: JPY strengthened 1–2 weeks before policy announcements, and USDJPY retraced sharply, giving back long-term gains. 4. Despite Downtrend in Yen, Reversal Risk Is Growing While the yen is still under pressure due to active carry trades and strong risk appetite in global equities, macro signals (yields + inflation + BOJ stance) suggest the balance of risks is shifting toward yen appreciation. This creates an attractive setup for position traders looking for a medium-term USDJPY short. Key Triggers Ahead FOMC meeting & Powell press conference – Wed, Oct 9 Potential volatility catalyst and sentiment shifter. Japan CPI (Dec 19) + BOJ rate decision Critical for confirming whether a full reversal can accelerate. Don't forget - this is just the idea, always do your own research and never forget to manage your risk!