Report published September 28, 2026

USD/JPY: Fresh Warning Against Yen Weakness – MUFG FX Strategy Research

MUFG · September 28, 2026

Broad US dollar strength driven by rising expectations of an October Fed rate hike and 10-year UST yields exceeding 5.20% has pushed USD/JPY to test its 200-day moving average around 158.50. However, upside toward 160 is challenged by escalating verbal intervention following Japan-US summit discussions regarding yen weakness.

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Finvaulta summarizes MUFG's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.

Key Takeaways

1.Fed funds futures pricing for an October FOMC rate hike has climbed to ~70%, driving 10-year US Treasury yields above 5.20% and underpinning broad US dollar strength.
2.Divergence between the Fed's hawkish posture and the BOJ's cautious tone has widened the policy gap, making December the most probable timing for the next BOJ rate hike.
3.Bilateral concern over yen weakness raised at the Japan-US summit acts as fresh verbal intervention, increasing the potential risk of coordinated intervention or use of the Fed's FIMA repo facility.

Week in review
Fed rate hike expectations drive the dollar higher
US-Japan policy divergence leaves dollar unchallenged
Yen weakness now on the leaders' agenda
Forecast range

Report data

FIGURE 1: USD/JPY — as of September 25, 2026.

Metric	Estimate	Context
USD/JPY weekly open	156.98 JPY per USD	Opening level for USD/JPY for the trading week
USD/JPY weekly high	159.03 JPY per USD	Weekly peak of USD/JPY supported by Fed rate hike expectations
USD/JPY weekly low	156.59 JPY per USD	Brief low in Asian trading during Japan's extended holiday
October FOMC rate hike probability	70.0%	Market pricing derived from Fed funds futures
10-Year US Treasury yield	5.2%	Surged above 5.20% for the first time since June 2007