USDJPY Week W28-2026: Yen Slides Toward 40-Year Lows at 161.51 as Fed's Waller Reverses Course and BOJ-Fed Divergence Keeps the Carry Trade Alive
USDJPY sits at 161.51, pinned at weekly VWAP with multi-timeframe alignment fully bullish. The pair is trending higher but conviction is low — price needs to hold above 161.51 (VWAP weekly) to keep near-term momentum intact. Trend structure stays valid down to 158.69 (TrendSL weekly). The macro setup remains straightforward: BOJ-Fed policy divergence is the dominant driver. Yen is hovering near 40-year lows against the dollar as that divergence persists. RSM's Brusuelas flagged Japan's growth-bet posture as the force keeping yen pressured ahead of any BOJ policy pivot — meaning the market isn't pricing a credible near-term shift from Tokyo. On the USD side, Fed's Waller reversed his dovish stance and signaled openness to further rate hikes if inflation stays hot. That lifted US rate-hike odds and helped USD hold gains even after a softer-than-expected June CPI print. US 10Y real yield at 2.32% supports USD as the higher-yielding, positive-carry side of this pair. COT positioning is bullish but crowding risk is worth monitoring — stretched yen shorts have a history of violent unwinds if BOJ surprises. DXY bias is bullish with medium conviction, providing base-currency support. Thesis breaks: weekly close below 158.69 invalidates bullish structure — exit longs. Sustained price below 161.51 signals momentum fade — reduce size. -- Intermarket Edge
