Japanese Yen Surges as Carry Trade Weakens, USD/JPY Falls Below 156.70

Japanese Yen (JPY) has become the best-performing currency against the US Dollar Index (DXY) in 2026, according to DBS Group Research economist Philip Wee.

The USD/JPY exchange rate has fallen below its end-2025 level of 156.70, and a major trendline break has increased the downside risk for this pair.

Weakening carry trade and reinforcement of the Yen's haven appeal are behind the JPY gains, which have been significant, appreciating 1.5% year-to-date against the USD overnight.