The U.S. currency surged past its early September resistance level to weaken the yen on September 16. The dollar rose to 155 against the Japanese currency despite a confirmed rate increase by the Bank of Japan, as traders priced in an 87% probability of a Federal Reserve rate hike. This development maintains the interest rate gap that fuels the carry trade.

Investors borrow yen at low rates to fund investments in higher yielding assets globally. Market conditions suggest an unwind of these positions is delayed until the BOJ signals more aggressive tightening or the Fed indicates a future pause in its rate cycle.