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USD/JPY stays near four-decade low as yen intervention fears weigh

The yen’s pullback risk is linked to Japan’s warning it will act if needed, while geopolitical pressure tied to US-Iran tensions keeps the USD supported.

Reported · Written up by our desk · Major Pairs

The USD/JPY currency pair traded with modest swings in Asian hours, hovering just below the mid 162.00s, as liquidity remained thin due to a Japan holiday, while the exchange rate stayed close to a four-decade high touched earlier this July, according to FXStreet.

FXStreet said market participants remained hesitant to buy the yen despite speculation that Japanese authorities could intervene. Japan’s Finance Minister Satsuki Katayama said on Friday that the government will take decisive action at any time if it becomes necessary, and the yen continued to struggle to attract buyers amid the wide rate differential that keeps yen carry trades active.

The outlet also pointed to economic risks connected to the Middle East crisis weighing on the yen. FXStreet noted that Japan depends on the Middle East for over 90% of its crude oil, and it cited ongoing US military strikes against Iran and reported attacks involving US allies, which kept traders pricing a higher geopolitical risk premium.

FXStreet further linked yen weakness to a backdrop of modest dollar strength and safe-haven demand. It added that traders, per the CME Group FedWatch Tool, still price the possibility of at least one Fed rate hike in 2026, a stance that could support the USD and underpin the case for additional near term gains in USD/JPY.

Latest closeWTI crude $79.00 ▼0.8%|USD/JPY 162.33 ▲0.2%

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