The Japanese yen is the biggest carry trade asset. Recently, the USD/JPY dropped below 7, which is related to Japan's plan to raise interest rates in December. Currently, the rate hike expectation is almost 90%. Narrowing interest rate differential: If the Bank of Japan raises interest rates (ending the negative interest rate policy) while the Federal Reserve (Fed) is about to stop hiking rates, the interest rate differential between the U.S. and Japan will narrow. Capital flow: A narrowing interest rate differential increases the appeal of holding yen-denominated assets. Investors are starting to pull funds out of USD assets and convert them into yen, pushing up the yen exchange rate and causing the USD/JPY to drop. Unwinding carry trades: The market is beginning to close out "yen carry trades," where cheap yen loans are used to invest in USD assets. This adds selling pressure on the USD in the market.