Yen Stays Under Pressure in 2026 as US-Japan Rate Gap Keeps Carry Trades Alive

3 articles · Updated · cryptorank.io · Aug 8

Early 2026 trading still favors selling the yen after two years of declines, with market intervention and official warnings failing to produce more than brief rebounds.
A wide US-Japan rate differential remains the main driver: the Fed is keeping rates higher for longer while the BOJ has only slowly backed away from ultra-loose policy.
Japan’s domestic backdrop has added little support, with inflation above the BOJ’s 2% target but softening, wage growth uneven, and the economy only narrowly avoiding recession in late 2025.
That mix helps exporters and equities but raises import costs for households and businesses, while leaving yen-funded carry trades, crypto strategies and other leveraged positions exposed to sudden FX swings.
Without decisive BOJ rate hikes, aggressive Fed cuts or a broader risk-off shock, analysts see the path of least resistance for the yen as lower.