Yen Breaks Through Key Level Amid Rising Expectations of Aggressive BoJ Cycle

The yen surged roughly 1% against every major currency on Monday, breaking through 155 and extending its cumulative gain against the dollar to around 3.3% over the first five trading sessions of September.

While some speculated that this was another intervention-driven squeeze, especially given thin Labor Day liquidity and Japan's record spending this year, the BoJ rate path is a more likely explanation.

Markets are now pricing in nearly four cumulative hikes by July 2027, with an aggressive BoJ tightening cycle being seen as the most durable factor driving the yen's strength.