The Bank of Japan's (BoJ) decision to normalize its monetary policy while other G10 central banks are cutting rates is raising concerns about the yen's stability. Historically, the yen has been either too weak or too strong, and current speculative positioning is nearing pre-COVID highs, which could push Japan back into deflation. Meanwhile, the Federal Reserve is expected to lower interest rates by 25 basis points in September to avert a recession and prevent rising unemployment. This move could reduce the risk of significant yen fluctuations. However, the unwinding of yen-funded carry trades poses a risk to US equities, as evidenced by recent market volatility and August mayhem. Forex strategists and Morgan Stanley have highlighted the ongoing risks associated with the yen carry trade, especially in light of potential Fed rate cuts, with a particular focus on US stocks.