Go short on USDJPY with 157.50 target as greenback loses ground

The USDJPY pair is trading near 158.45, having clawed back some ground after yesterday's sharp drop from 159.60. The dollar sell-off was set in motion by a surprise move from the US Treasury: a decision to double its purchases of long‑term bonds. This sent the 30‑year yield—which had surged above 5.3% on Tuesday—into a tailspin. It plummeted more than 10 basis points, marking its steepest daily decline since last autumn. High returns had been one of the greenback's most reliable pillars of support, and their sudden collapse has left the currency exposed.

Against this backdrop, Wednesday's FOMC minutes felt almost like an afterthought. Although the document revealed that some committee members were growing comfortable with raising interest rates, the market responded with a dose of skepticism. The minutes reflected a snapshot of sentiment from three weeks ago, and much has shifted since then. In fact, more recent employment and inflation data have steered expectations toward a pause. So, the Federal Reserve's hawkish signals are largely outdated. 

On the Japanese side, the fundamental picture is equally dollar‑unfriendly. Export growth has stretched into an eleventh consecutive month, underscoring the resilience of the national economy. This also strengthens the case for the Bank of Japan (BoJ) to tighten monetary policy in September. Such a development would gradually narrow the interest rate gap between the two countries and reduce the dollar's appeal. This trend is reinforced by the unwinding of short yen positions, which gained momentum after the joint intervention by Tokyo and Washington in late July. 

With the pair rebounding from yesterday's drop from 159.636 to 158.450, it looks more like a technical bounce than a genuine turnaround. The Chaikin Oscillator, though still positive, has been slipping since its August peak—a sign that buying momentum is quietly draining away. This is a red flag for bulls. The Relative Strength Index (RSI), stubbornly stuck below 50, has inched higher, but it remains firmly in bearish territory, confirming that sellers are still in control and the broader downtrend is intact.

For those ready to make a move, pay attention to the trading plan down below:

Sell USDJPY at the current price. Place Take profit at 157.05. Set Stop loss at 159.60.

This forecast is valid from August 20 to August 27, 2026.