The Yen Shock Broke the Trend. The Rate Gap Is Trying to Repair US Dollar vs. Japanese YenFX:USDJPYSophie_MarenUSDJPY is recovering, but the damage from the latest selloff has not disappeared. The previous H4 bullish structure was broken decisively when price collapsed through the area around 161. Since then, buyers have rebuilt momentum, but they are still operating beneath the level that previously supported the trend. The fundamental picture helps explain why the rebound has not faded completely. The Bank of Japan kept its policy rate around 1.0% on July 31, although one board member preferred 1.25%. Meanwhile, the Federal Reserve held rates at 3.50–3.75%, with three policymakers voting for a 25 bp increase. The interest-rate gap therefore remains substantial, even as the BoJ shows signs of becoming less comfortable with prolonged accommodation. That leaves USDJPY in a weak bearish structure with improving recovery momentum. The immediate scenario is a continuation toward the broken 161 area. A rejection there would reinforce the idea that former support has turned into resistance and that sellers still control the broader structure. A sustained recovery above that area would change the picture materially, especially if the next pullback forms a higher low. Invalidation: Acceptance back above the broken 161 structure would weaken the immediate bearish thesis. For now, buyers are repairing momentum. They have not yet repaired the trend.