USD/JPY Falls Below MUFG's Forecast Floor Amid Shift in Market Narrative

The USD/JPY exchange rate has fallen below MUFG's forecast floor of 155, trading as low as 154.50 in early September.

Teppei Ino from MUFG notes that several Japan-specific factors are supporting Yen strength, including comments from US Treasury Secretary Scott Bessent around the G20 regarding Japan's fiscal and monetary policy.

Bessent suggested that Japan should move away from its reflationary policies, which has contributed to a change in tone for the USD/JPY since the middle of last week.

The break below 155.50 on September 7 triggered a further decline of around 1 yen, with the pair briefly falling below the 38.2% retracement level of its rise from the April 2025 low to the July 2026 high.