USD/JPY Finally Breaks 155: US Pressure and BOJ Shift Contribute

The USD/JPY finally broke through the 155 level on September 7, marking its third attempt. This level had been defended twice before by intervention-driven efforts and had become a major psychological marker for the market.

The yen is currently benefiting from a rare alignment of forces: increased pressure from Washington for a stronger currency, expectations of a faster BOJ tightening path, and renewed speculation that Japanese capital could be pulled back home.

US Treasury Secretary Scott Bessent has become increasingly forceful in his comments about Japan's fiscal and monetary policy, arguing that the country should move away from its reflationary stance and produce a stronger yen. He met with BOJ Governor Kazuo Ueda on the sidelines of the G20, where they discussed monetary policy communication, inflation expectations, and avoiding excessive exchange rate volatility.

BOJ board member Hajime Takata added to this shift by arguing that the Bank should be prepared to raise rates nimbly rather than feel bound by the pace already anticipated by markets. The possibility of a capital reshoring back into Japan is also being considered, as the Government Pension Investment Fund's asset allocation may be shifted towards domestic financial assets.