Global Capital Rotation Batters Greenback; USD/JPY Pierces 156

London / Tokyo — The era of market exceptionalism in the US appears to be fading, triggering a massive reallocation of capital that is weighing heavily on the US Dollar. High valuations and currency weakness are driving a decisive shift toward European and Asian assets.

• ETF Inflows: Investors poured $51.6 billion into international equity ETFs in January 2026.
• Dollar Weakness: The Greenback depreciated 9.4% throughout 2025.
• Key Support: USD/JPY has pierced the psychological 156.00 handle.

The “De-Americanization” of Portfolios

After years of heavy exposure to US mega-cap tech stocks, institutional sentiment has shifted. High valuations combined with a weakening currency are driving funds overseas. Keith Lerner of Truist Advisory Services notes this fits a “global bull market” narrative, fostering a virtuous cycle for the Euro and Japanese Yen.

Furthermore, DBS Group Research reports that its FX risk score has dropped to the lowest level since 2021, primarily due to this broad-based weakness in the US Dollar.

USD/JPY Technicals & Key Support

The impact of capital flows is most acute in the USD/JPY pair. MUFG analysts report that the pair has breached the psychological 156.00 handle. This move is driven by the dual forces of Dollar outflows and a hawkish Bank of Japan.

• Trend: Michael Wan of MUFG confirms downside bias remains the dominant theme.
• Drivers: Narrowing yield gaps between US and Japanese yields, coupled with capital seeking value in Tokyo equity markets.