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Yen lags as USD/JPY holds near 159.50 despite wider dollar dip

The yen’s underperformance comes as USD/JPY moves with rising oil prices, a jump in the 30-year Treasury yield to 5.31%, and a reported US call for Japan to tighten faster.

Reported · Written up by our desk · Major Pairs

USD/JPY traded near 159.50 through Monday, staying inside a roughly 75-pip range, as the broader US dollar weakened after the Dollar Index fell below its 200-day EMA to its weakest level since June. Other major currencies extended that drop, but the yen did not, according to FXStreet.

The newsletter cited war-driven dynamics as the main Monday catalyst, with crude oil rising about 3% and the 30-year Treasury yield topping 5.31%, its highest level since June 2007. It also linked the move to expectations that the Bank of Japan will stay at 1.00% after June’s increase, even after a weak Japanese growth report.

FXStreet also pointed to an official bid behind the rate story, saying Japan faced the largest single-session yen buying on record at the turn of the month. It added that there was a first coordinated operation with the US Treasury since 1998, with Washington described as calling the currency substantially undervalued and pressing Tokyo to tighten faster, alongside pricing for roughly 80% odds of a move at next month’s BOJ meeting.

Japan’s preliminary second-quarter GDP miss was also referenced, with growth at 0.3% on the quarter versus a 0.5% consensus and a 0.5% prior. The report said the GDP deflator came in at 2.6% year over year versus 2.4% expected, while weak domestic demand hit capital spending and household consumption, keeping the tightening case tied more to currency policy than the broader economy.

Latest closeWTI crude $95.27 ▲3.4%|USD/JPY 158.89 ▲0.9%|Dollar index 101.29 ▲0.2%

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