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Japan just spent billions to stop this trade. It is not going to work.
The Yen Carry Trade is Unwinding. Here is Why 160 is the Target.
Samuel Leach
May 06, 2026
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Wednesday 6 May 2026 | Issue #004 | Live Market Edition
The Yen Carry Trade is Unwinding. Here is Why 160 is the Target.
Japan intervened to save the yen, but the macro forces driving the carry trade have not changed. Here is a breakdown of why USD/JPY could be heading back to 160, plus the latest live market data.
Samuel Leach · Samuel & Co Trading · 6 min read
The Big Picture
Understanding the USD/JPY Carry Trade
Over the past week, we have seen massive volatility in the USD/JPY pair. The Bank of Japan (BoJ) and the Ministry of Finance intervened aggressively after the pair breached the critical 160.00 level, sending it spiralling lower towards 155.00. But as I write this, it is already creeping back up to 156.23.
To understand why, you need to understand the carry trade. In simple terms, a carry trade involves borrowing money in a currency with a low interest rate (like the Japanese Yen) and investing it in an asset that provides a higher rate of return (like US Treasuries or the US Dollar).
Right now, the US Federal Reserve has rates at 3.50%-3.75%, while the BoJ is barely above zero. This massive interest rate differential makes it incredibly profitable for institutions to short the yen and buy the dollar. You earn the yield difference every single day you hold the trade.
The recent intervention by Japan was an attempt to squeeze these short sellers. They spent billions of dollars buying yen to drive the price up. But here is the problem: intervention only buys time; it does not change the trend.
Why 160 is the Target Again
Unless the Fed cuts rates significantly, or the BoJ hikes rates aggressively, the fundamental driver of the carry trade remains intact. Furthermore, Japan is a major energy importer. With oil prices elevated, Japan has to sell yen to buy dollars to pay for oil, adding further downward pressure on their currency. The 160-162 zone is now the clear policy ceiling, but the market will likely test Tokyo's resolve again.
Live Market Snapshot
Today's Numbers — 6 May 2026
Here is where the key assets stand right now, with live data pulled this morning.
| Asset | Live Price | Day | Outlook |
|---|---|---|---|
| S&P 500 | 4,678 | +2.40% | Strong bounce back |
| Nasdaq | 13,584 | +6.45% | Tech leading the charge |
| VIX | 16.93 | +1.23% | Volatility remains contained |
| Gold (XAU/USD) | $4,679 / oz | +2.44% | Safe haven demand persists |
| Oil (Crude) | $76.42 / bbl | +3.85% | Bouncing off recent lows |
| FTSE 100 | 7,384 | +6.45% | Tracking global equities higher |
| GBP/USD | 1.1734 | +0.32% | Finding support |
| Bitcoin (BTC) | $81,386 | +0.66% | Consolidating above $80k |
| USD/JPY | 156.23 | -1.04% | Intervention aftermath |
Samuel's Trading Playbook
How I Am Trading USD/JPY
The intervention has changed the tactical map, but not the macro story. USD/JPY above 160 is politically uncomfortable for Japan, but a sustained move lower needs lower US yields or a more hawkish BoJ.
I am treating the 155.00-156.00 area as a key support zone. If it holds, we are likely range-bound with an upward bias. I am looking for long setups on dips into this zone, with tight stops below 154.00, targeting a grind back towards 158.00 and eventually testing that 160.00 ceiling again.
However, be warned: above 159.00, the risk-reward for fresh longs deteriorates rapidly because the threat of another BoJ intervention becomes extreme. Trade the range, respect the policy ceiling, and do not fight the BoJ at the extremes.
Stay sharp, manage your risk, and trade well this week.
Samuel Leach
Founder, Samuel & Co Trading
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This newsletter is for educational and informational purposes only and does not constitute financial advice. All market data sourced from Yahoo Finance as of 6 May 2026. Past performance is not indicative of future results. Trading involves risk and you may lose more than your initial investment.
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