Created on September 10, 2026

The “Dragon” continues to fall at the moment, as the Japanese yen outperforms almost every other currency that I have been following. At this point, the carry trade looks to be in serious trouble. Is an opportunity presenting itself?

GBP/JPY

The British pound finds itself falling against the Japanese yen again during the early part of the trading session on Wednesday as the carry trade unwind continues. The ¥207 level seems to be a major support level, having held multiple times, and therefore it is not a huge surprise to see a little bit of stability in this area starting to show itself.

It is not so much a sterling sell-off; this is about the yen rallying, as sterling is slightly stronger against many other currencies. However, traders continue to aggressively unwind yen shorts. The catalyst right now is the Bank of Japan, as markets are increasingly expecting a 25-basis-point Bank of Japan hike next week. The appreciation of 4% over the last 5 sessions is enough to rattle the markets in general.

The catalyst right now is the Bank of Japan

The market is one that traders tend to use a lot for carry trades, but this is also a situation where the Bank of England is expected to leave rates unchanged next Thursday, so that means the interest-rate differential may shrink just a touch. U.K. yields are extremely high, and the 10-year gilt is right around 5.2%, so the British pound remains a substantial yield-advantage currency. But the directional change in Japanese monetary policy matters more right now than the absolute spread.

Overall, this is a scenario where the Stochastic RSI is deeply oversold, so people may be looking at that. But with the Bank of England coming out on September 17 and the Bank of Japan on September 18, we might see a bit of noise here. I personally am looking for value, as the carry certainly is attractive, but the question is: will we get the bounce here, or do we have to fall closer to ¥205 to see it?

Begin trading our daily forecasts and analysis. Here is a list of Forex brokers in Japan to work with.

Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire

The euro zone also remains front and center. The ECB is going to hike rates by 25 bps today and mail the deposit rate at 2.50%. The consensus in the market is that the ECB will not hike again this year. Euro zone inflation was at 3.3% in August, and pressure on energy prices is building, with Deutsche Bank calling for a December rate hike.

Sterling remains subdued. The Bank of England is more cautious than its peers. There is a high consensus in the market that the BoE will hold rates on September 17. 57 of the economists polled in the REUTERS survey expect the BoE to hold for the remainder of the year. Energy concerns are high, and wage and price inflation are still muted.

As indicated in the chart, tightening by the ECB contrasts with the Fed’s data dependency and the BoE’s wait-and-see approach.

Fundamental bias: DXY neutral-to-bearish, EUR moderately bullish, GBP neutral.

U.S. Dollar Index Technical Analysis: DXY Stays Below 98.90 as Sellers Keep Control

The GBPJPY pair forced to provide more sideways trading after facing a strong obstacle at 207.20, delaying the negative trend and its stability near 208.10 level, reminding you that the negative scenario will remain valid, depending on the stability of the barrier at 210.40, also providing negative momentum by the main indicators will increase the chances of attacking the current obstacle, and surpassing it will make the price target new bearish stations that might begin at 206.70 and 205.85.

The failure of breaking the obstacle and holding above it will confirm the dominance of the sideways trend, to expect forming mixed instable trading with a chance to recover some of the losses by its rally towards 209.60.

The expected trading range for today is between 206.70 and 208.45

Trend forecast: Bearish

The EURUSD pair has been experiencing volatile trading in its latest intraday movements, as the pair attempts to offload some of its overbought conditions on the relative strength indicators, with negative signals beginning to emerge, against the dominance of the short-term bullish trend, with the pair moving alongside a trend line supporting this path. In addition, positive pressure continues to stem from trading above EMA50, which provides a support base that reinforces the pair’s chances of rising in the near term.

– Written by


Frank Davies

STORY LINK Pound Sterling Forecast: Yen Surge and Fed Rate Bets Lift GBP/USD

The Pound US Dollar (GBP/USD) exchange rate made modest gains on Wednesday, with Sterling benefiting as broader currency market dynamics limited demand for the US Dollar.

At the time of writing, GBP/USD was trading at around $1.3559, up by approximately 0.2% compared with Wednesday’s opening levels.

The US Dollar (USD) struggled for momentum on Wednesday, with a rally in the Japanese Yen putting pressure on the ‘Greenback’.

The Yen rose to a seven-month high against the US Dollar as expectations of a Bank of Japan (BoJ) interest rate hike continued to build.

Growing speculation around further monetary tightening in Japan has also encouraged investors to unwind Yen-funded carry trades, providing another source of support for the currency.

Meanwhile, the US Dollar faced additional headwinds as markets adopted a cautious stance ahead of Friday’s US consumer price index.

August’s inflation figures could have a significant bearing on the Federal Reserve’s September policy decision, with markets currently assigning around a 60% probability to a 25-basis-point rate hike.

A weaker-than-expected inflation reading could cause these expectations to retreat, particularly following comments from Fed Governor Christopher Waller suggesting he would prefer to keep interest rates unchanged if there are indications that price pressures are continuing to ease.

Sterling (GBP) managed to edge higher against the US Dollar but remained largely subdued versus its other major counterparts on Wednesday as a fresh jump in energy costs reignited concerns over UK inflation.

UK wholesale natural gas prices surged to their highest levels since 2022, with ongoing instability in the Middle East contributing to the sharp increase.

Higher energy costs could strengthen the case for the Bank of England (BoE) to raise interest rates later in the year.

However, the potential impact on consumers appeared to be a greater concern for GBP investors.

There are growing fears that another squeeze on household finances could weigh heavily on consumer spending, potentially undermining the UK economy’s momentum in the months ahead.

Near-Term GBP/USD Forecast: US Producer Prices in Spotlight

Turning to Thursday, the latest US inflation data is likely to set the tone for the Pound to US Dollar (GBP/USD) exchange rate.

The latest producer price index is expected to show that factory-gate inflation picked up again in August.

A stronger-than-forecast reading could reinforce expectations ahead of Friday’s more closely watched consumer price data, potentially lending further support to the ‘Greenback’ if it points to renewed inflationary pressure.

For Sterling, attention will shift towards the UK’s latest GDP figures on Friday.

Economists expect month-on-month economic activity to have stagnated in July. Should the figures confirm that growth stalled, the Pound could face fresh selling pressure as investors reassess the outlook for the UK economy.

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TAGS: Pound Dollar Forecasts

The U.S. 2-year yield is the first place I’m focusing on today. It continues to climb. Rates rocketing higher suggest people are becoming more and more used to the idea that the Federal Reserve is likely to hike rates, or at least that it is becoming more likely to hike rates next week.

Created on September 09, 2026

The GBP/JPY pair has dropped significantly, only to turn things around and show signs of life again.

GBP/JPY

The British pound initially fell against the Japanese yen as we continued to see a lot of carry trade unwind around the world, but it has turned back around later in the day. Perhaps the Japanese yen got a little bit ahead of itself.

So as we head toward a Bank of Japan interest rate decision late next week, we also have to keep in mind that the interest rate differential is going to continue to be a big driver over the longer term.

The question is whether or not we have seen the carry trade unwind finish, or whether the market still has further to go.

The hammer that we are forming for the session is a good look. So we’ll see. I’ll be watching the 210 yen level for a potential breakaway to the upside.

A breakdown below the bottom of the candlestick for the day would be very negative. It could open up the pound to drop down to the 205 yen level.

Overall, this is a market that is being heavily influenced by the Bank of Japan and its intervention. And the question now is whether or not that intervention continues.

This isn’t the primary pair. The primary pair is dollar-yen, but this still has that huge interest rate differential. And even if the Bank of Japan does raise rates, it only makes a slight difference.

It certainly is a market that has been manipulated. That’s nothing new via intervention. But from a longer-term standpoint, not much has changed.

Maybe the British pound softens a little bit, and maybe the next high isn’t at 220 yen like we had seen at one point.

But the interest rate differential continues to be supportive, although that has deteriorated over the last couple of weeks.

Begin trading our daily forecasts and analysis. Here is a list of Forex brokers in Japan to work with.

Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire

The EURJPY pair attempted to form sideways trading yesterday, however its stability below 180.80 barrier pushed it to renew the bearish attempts, to settle near 178.40 level.

Providing negative momentum by the main indicators reinforces the chances of resuming the bearish trend, to expect surpassing 177.80 level to pave the way for reaching extra negative stations, which are located near 177.35 and 176.70.

The expected trading range for today is between 177.35 and 179.40

Trend forecast: Bearish