Is the tide beginning to turn in favour of a stronger JPY?FX Daily Snapshot

中文标题

日元走强的趋势是否开始显现？· 外汇每日快照

MUFG09/04/2026updated 10/17/2026

Citable research brief

Core conclusion · Tlines extraction

MUFG observes that the recent sharp yen appreciation appears driven by fundamental drivers rather than intervention, increasing the likelihood of a sustained USD/JPY rebound below 155.00. Building expectations for faster BoJ tightening, including a possible 25bps rate hike this month, and speculation over GPIF shifting allocations toward domestic assets, provide further yen support. Concurrently, the US dollar weakened as Fed rate hike expectations were scaled back after cautious comments from Fed officials; MUFG views today's nonfarm payrolls as less important for Fed pricing than next week's CPI report.

Institution: MUFG
Published: 09/04/2026
Research topic: JPY direction · JPY · BoJ rate hike
Time horizon: medium-term · this month · current · short-term

EUR/USD · EURUSD Fed policy · FED

Key arguments

JPY strength is driven by fundamental drivers rather than intervention, increasing the likelihood of a more sustained rebound.
BoJ is leaning toward raising its policy rate by 25bps this month, with inflation risks skewed to the upside.
Speculation over GPIF shifting asset allocation toward domestic assets supports the yen by easing capital outflows.
Fed rate hike expectations have been scaled back following cautious comments from Fed leadership, weakening the US dollar.

Key numbers

USD/JPY level: 155.00
BoJ rate hike expected: 25bps
Cumulative BoJ hikes priced by year-end: ~50bps
Cumulative BoJ hikes priced by mid-next year: over 75bps
MUFG forecast for further BoJ hikes: 75bps
Probability of Fed rate hike this month: close to 50:50
Probability of Fed rate hike at start of month: closer to 70%
Japanese ministries' total spending request: JPY143.1 trillion

Main risks

BoJ could opt for a larger 50bps 'jumbo hike' if inflation risks materialize, although the report dampened such speculation.
Fiscal policy under the Takaichi administration remains a concern, with large spending requests potentially pressuring JGB yields and the yen.
Sudden changes in Fed expectations, especially around the August CPI report, could alter USD/JPY dynamics.

Corresponding source evidence

On this occasion the sharp strengthening of the yen appears to have been driven by fundamental drivers rather than intervention which increases the likelihood of a more sustained rebound. · medium-term
Furthermore, hawkish comments from BoJ officials including Governor Ueda at the start of this week have signalled that a rate hike is likely this month. · this month
At the same time, the yen has derived some support as well by renewed speculation over the potential for the GPIF to shift their asset allocation towards domestic assets which would help to ease capital outflows into overseas markets that have been weighing on the yen. · medium-term

Conditions / invalidation

If the GPIF shifts allocation toward domestic assets
If cooling in recent data continues over the next two weeks