USD/JPY Rallies Above 160 Amid Bullish Channel and Warsh's Optimism

The US dollar continues to gain strength against the Japanese yen, climbing above 160 after Fed Governor Kevin Warsh expressed optimism about the US economy and warned of elevated inflation.

This has extended a bull channel from around 155.20, with investors potentially rebuilding dollar longs and yen shorts following August's position trimming.

According to CFTC data, leveraged funds have begun cautiously adding short-yen exposure as volatility declines, but yen futures open interest has dropped to its lowest level since April, suggesting limited bearish conviction.