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USD/JPY holds near 158 as yen gains fade after intervention

USD/JPY was at 158.39, with pressure on the yen linked to wide interest rate differentials, rising fiscal risks, high energy and import costs, and weak Japanese household spending.

Reported · Written up by our desk · Major Pairs

USD/JPY traded around 158.39 on Friday as yen gains from a joint intervention by Tokyo and Washington faded, according to Action Forex. The renewed pullback has revived expectations that authorities could consider additional action.

The outlet said the intervention is not enough to offset the underlying drivers weighing on the yen, including a broad interest rate differential, rising fiscal risks, and elevated energy and import costs. It also pointed to a stronger U.S. dollar and oil’s recovery after renewed tensions around the Strait of Hormuz.

Weak domestic data in Japan added to the pressure, with Action Forex citing Japanese household spending falling 3.3% in June versus a 1.0% expectation. Markets are also pricing the possibility of a Bank of Japan rate hike in September, even after the central bank left policy unchanged last week.

Action Forex added that technical levels suggest short term downside toward 157.90 before a rebound toward 159.50, while noting intervention risks remain a factor. It said the H4 chart is showing consolidation and that short-term indicators point to downside pressure.

Latest closeUSD/JPY 158.52 ▲0.6%

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