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Japanese yen edges higher near multi-decade lows as USD softens

USD/JPY trades around 162.45, while markets price a 63% chance of a Fed rate hike in September, helping limit the dollar’s downside.

Reported · Written up by our desk · Major Pairs

FXStreet reports USD/JPY is trading slightly lower on Thursday, around 162.45, as a mildly softer US Dollar supports the Japanese yen. The yen remains near multi-decade highs, keeping traders focused on the possibility of intervention from Tokyo.

FXStreet also notes that persistent yen weakness reflects structural headwinds in Japan, including low interest rates and a deteriorating fiscal outlook. Any prior suspected intervention efforts have not been sustained, and those longer-term factors continue to weigh on the currency.

A near-term pressure point for JPY comes from renewed US-Iran fighting, which has pushed oil prices higher amid risks to crude flows through the Strait of Hormuz. Higher oil costs tend to weigh on the yen because Japan relies heavily on imported energy, particularly from the Middle East.

FXStreet adds that the oil-driven inflation focus is increasing pressure for central banks to stay restrictive, while hawkish Fed expectations and escalating geopolitical tensions keep the US dollar’s downside contained. The US Dollar Index is around 101.00 after an intraday low of 100.79, and the Bank of Japan’s gradual tightening still lags other major central banks, leaving the interest-rate gap to support USD/JPY.

Latest closeWTI crude $81.23 ▼1.7%|USD/JPY 163.85 ▲0.1%|Dollar index 101.39 ▼0.1%

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