Important events today:

04.09 12:30 UTC: USD – Unemployment Rate.

The yen maintains its upper hand following a sharp rise in Bank of Japan rate hike expectations. Market participants are bracing for a more hawkish stance from the central bank at its September seventeenth to eighteenth meeting, driving a unwind in carry trades and capping any recovery in USDJPY following its recent drop.

Fresh statements from officials provide additional support to the Japanese currency. Japan’s top currency diplomat reaffirmed heightened vigilance over exchange rate movements and ongoing communication with US counterparts. While there is no official confirmation of a new intervention, the combination of these signals with the recent joint intervention by Japan and the US elevates the risks of further dollar buying against the yen.

From the US side, cooled expectations regarding the Federal Reserve’s rate path are eroding the dollar’s former yield advantage. Even with a modest rebound in employment, slowing wage growth is likely to keep the US central bank cautious. A stronger repricing of Bank of Japan policy, coupled with persistent intervention risks, continues to favor a downside scenario for USDJPY.

Recommendations: SELL 156.30, SL 156.70, TP 155.30.