The yen reached 154.04 per dollar on Sept. 7, its strongest level since February, after gaining as much as 1.4% intraday and 3.3% across five September trading sessions. The move through the 155-per-dollar threshold occurred in thin liquidity during the U.S. Labor Day period as traders positioned for a possible Bank of Japan rate increase and assessed signs that Japanese authorities had funded record currency intervention through overseas securities sales. Interest-rate markets price roughly a three-in-four chance of a 25-basis-point BOJ increase to 1.25% at next week's meeting, with some investors now considering consecutive increases in September and October. Lee Hardman of Mitsubishi UFJ Financial Group said expectations for tighter policy and pension-fund repatriation of overseas capital could support a more durable yen recovery, though other strategists warned that a fully priced rate increase could trigger a sell-the-fact reaction. Japan's overseas securities holdings fell by a record $87.8 billion in August, close to the $98.6 billion that the Ministry of Finance said authorities used for intervention through Aug. 26. The rapid yen appreciation has also renewed concern about unwinding yen-funded carry trades, as higher Japanese rates raise the cost of borrowing the currency and can force investors to close leveraged positions. The yen's direction will depend on BOJ policy, the Federal Reserve's outlook, capital flows and the durability of intervention support.