Japanese Yen Forecast 2026: Will the Yen Fall Further? AUD/JPY & USD/JPY Outlook

The Japanese yen remains under pressure in September 2026, with USD/JPY trading around 160.21 and AUD/JPY near 114.5 on September 2. For Australian traders and investors, the weakness of the yen is particularly important because a stronger Australian dollar means Australians can currently buy more Japanese yen for the same amount of AUD.

The key question now is no longer simply “Why is the yen falling?”, but rather:

Can the yen weaken further from current levels, or is September likely to mark a major turning point?

The answer could depend heavily on the Bank of Japan (BoJ) September 17–18 policy meeting, Japanese inflation, US interest rates and the possibility of another Japanese or coordinated intervention.

The BoJ has recently become increasingly concerned about inflation and yen weakness. Governor Kazuo Ueda said on September 2 that the central bank will continue considering further rate increases and will assess whether economic conditions and inflation risks are developing in line with its forecasts.

At the same time, the yen remains close to levels that have previously triggered intervention concerns.

For Australian CFD traders, this creates a potentially significant setup in both AUD/JPY and USD/JPY.

SELL BUY

AUD/JPY was around 114.5 on September 2, with the pair having traded between approximately 114.4 and 114.7 during the session. The pair has also gained significantly over the past month, reflecting continued Australian dollar strength relative to the yen. 

SELL BUY

Meanwhile, USD/JPY was around 160.21, showing that the yen has failed to sustain the sharp appreciation generated by the July–August intervention.

For Australians travelling to Japan, this is an unusually favourable exchange-rate environment. For forex and CFD traders, however, the same weakness creates a much more complicated risk-reward setup.

The yen's latest decline comes despite several developments that would normally support the currency.

Japan and the United States recently coordinated efforts to stabilise the yen, producing a sharp but temporary rally. USD/JPY subsequently moved from near 164 toward approximately 155.

However, the recovery did not last.

By September 1–2, USD/JPY had returned to around 160. There are several reasons.

1. The US-Japan Interest Rate Gap Remains Large

Interest-rate differentials remain one of the biggest structural drivers of USD/JPY.

The US still offers substantially higher interest rates than Japan, encouraging investors to hold US-dollar assets or use the yen as a funding currency.

Even though the BoJ is gradually tightening monetary policy, markets continue to view the normalisation process as relatively slow compared with the level of US rates.

This means that yen carry trades remain attractive, particularly when investors expect the US dollar to remain strong.

2. The BoJ Has Not Yet Delivered the Rate-Hike Cycle Markets Want

The BoJ has raised rates during its normalisation process, but policymakers remain cautious because Japan has a very large government debt burden and economic growth remains relatively fragile.

Japanese 10-year government bond yields recently approached 3%, their highest level in decades, highlighting how quickly financial markets are repricing Japanese monetary policy.

The problem for the yen is that expectations alone may not be enough.

Markets increasingly want evidence that the BoJ is prepared to raise rates more frequently.

Reuters reported in August that the BoJ was considering a September rate hike and potentially a faster pace of tightening thereafter.

The September 17–18 BoJ meeting is arguably the most important event for the Japanese yen in the near term.

Markets have increasingly priced in the possibility of another rate increase.

A Reuters poll found that 57% of economists expected a September rate hike, a substantial increase from earlier expectations.

More importantly, recent comments from BoJ officials have become increasingly hawkish.

BoJ Deputy Governor Ryozo Himino said the central bank should consider timely rate increases because of inflation risks.

Governor Ueda also said on September 2 that the BoJ would continue debating further rate increases and pay close attention to upside inflation risks.

What could happen to the yen?

The biggest risk for yen bears is therefore not simply a rate hike.

It is a rate hike combined with guidance suggesting that additional increases could follow.

Intervention is another major factor traders need to monitor.

The previous US-Japan intervention temporarily strengthened the yen, but the move eventually faded.

Japan and the US have since agreed to continue coordinating on orderly yen movements. Japanese officials have not identified a specific USD/JPY level at which intervention is guaranteed.

This distinction is important.

160 is not necessarily a hard intervention line.

Instead, Japanese authorities are likely to pay attention to:

• the speed of yen depreciation

• disorderly market movements

• excessive speculative positioning

• the impact of FX weakness on Japanese inflation

• movements in Japanese government bond yields

USD/JPY trading around 160 therefore represents an important risk zone, but not an automatic intervention trigger.

For CFD traders, this means that holding a large short-JPY position near 160–162 carries a potentially significant event risk.

These are scenario ranges rather than guaranteed price targets. The actual reaction will depend on the BoJ statement, Federal Reserve expectations, Australian interest rates and broader risk sentiment.

For an Australian CFD website, AUD/JPY deserves particular attention.

Unlike USD/JPY, AUD/JPY reflects the relationship between two currencies that are both influenced by commodity prices, interest rates and global risk sentiment.

On September 2, AUD/JPY was around 114.5, close to multi-decade highs for the Australian dollar against the yen.

This is important for two very different groups.

Australian travellers

A stronger AUD/JPY exchange rate means Australians can currently receive more yen for each Australian dollar.

For example, at approximately 114.5 JPY per AUD: A$1,000 ≈ ¥114,500

before fees and conversion spreads.

AUD/JPY CFD traders

A high AUD/JPY price means the pair is potentially vulnerable to a sharp reversal if the BoJ surprises markets.

The key levels to monitor are:

A break below 113 could therefore become more meaningful than simply a normal intraday pullback.

Open a Trading Account

      “Trade AUDJPY with an ASIC-regulated broker. Fast AUD funding via PayID. ”  

Even if the BoJ raises rates, the yen faces several longer-term challenges.

Large interest-rate differentials

Japan still has significantly lower interest rates than the US and many other developed economies.

High energy import dependence

Japan relies heavily on imported energy, making the currency particularly sensitive to oil prices.

The latest increase in Middle East tensions has pushed oil prices higher, while also supporting the US dollar and increasing global inflation concerns.

Higher energy prices can therefore create a difficult environment for Japan:

Weak yen → higher import costs → higher inflation → pressure on households.

Japan's high government debt

Japan's government debt burden is among the highest in the developed world.

That limits how aggressively policymakers can raise rates without increasing debt-servicing costs.

Japanese bond yields recently climbed to around 3%, demonstrating that markets are already becoming more sensitive to Japan's fiscal position.

This creates a difficult balancing act for the BoJ:

Raise rates too slowly → yen remains weak

Raise rates too quickly → economic and fiscal risks increase

The answer depends on why you want to buy yen.

If You Are an Australian Traveller

The current AUD/JPY exchange rate is relatively favourable for Australians.

With AUD/JPY around 114.5, A$1,000 is equivalent to approximately ¥114,500 before fees and spreads.

However, attempting to perfectly time the bottom or top of the exchange rate is difficult.

If you are travelling to Japan within the next few months, a staggered conversion strategy may reduce the risk of converting your entire travel budget immediately before a major BoJ-driven move.

If You Are a Forex or CFD Trader

The situation is different.

The September BoJ meeting could create significant volatility in both USD/JPY and AUD/JPY.

Yen-bearish setup

A trader expecting further yen weakness could monitor:

USD/JPY above 160 and AUD/JPY above 114–115 for potential continuation signals.

A sustained USD/JPY move above 162 would make the yen-bearish scenario more compelling, although intervention risk would also increase.

Yen-bullish setup

A trader expecting a yen recovery could monitor:

USD/JPY below 160 followed by breaks of 158 and 155.

For AUD/JPY, a sustained move below 113 could signal that the current yen weakness is beginning to reverse.

Because these markets can move sharply around central-bank announcements, stop-loss orders and appropriate position sizing are particularly important.

If you believe the Japanese yen is about to strengthen or weaken, you don't necessarily need to exchange physical Australian dollars for Japanese yen. Australian traders can also use forex CFDs to speculate on currency movements, including pairs such as USD/JPY and AUD/JPY. 

* CFDs are leveraged derivatives and carry a high level of risk. You should consider whether CFD trading is appropriate for you and ensure you understand the risks before trading. Past performance is not indicative of future results. 

You might be interested in…