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USD/JPY drops below 160 as traders weigh BoJ intervention risk

USD/JPY slid from 163.70 to below 160 as the dollar weakened after softer US GDP and June core PCE data, while traders also unwound short yen positions ahead of Friday’s BoJ decision.

Reported · Written up by our desk · Major Pairs

USD/JPY extended its slide during US trading, falling from a session high of 163.70 to below 160.00, prompting traders to debate whether Japan stepped in or whether the move was driven by positioning.

Action Forex said the renewed acceleration lower during US hours coincided with broad dollar weakness after softer-than-expected US second-quarter GDP growth of 1.5% and June core PCE inflation slowing to 3.3%, which reduced the amount of intervention authorities might need to push the pair down meaningfully.

The outlet also pointed to another contributing factor, investors unwinding short yen positions ahead of Friday’s Bank of Japan policy decision, after the yen had already strengthened broadly earlier in Europe, gaining about 100 pips versus the dollar.

While the analysis noted that the move could be explained without intervention, it highlighted that interest rate markets assign better than an 80% probability to a potential BoJ hike in October, even as the yen has lagged Japanese bond yields in reflecting that outlook.

Latest closeUSD/JPY 163.42 ▼0.2%

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