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USD/JPY drops toward 158 as traders weigh possible intervention risk

Markets are also repricing Bank of Japan tightening, with OIS pricing about 96.5 basis points of cumulative tightening over the next 12 months and September hikes priced at roughly an 84% probability.

Reported · Written up by our desk · Major Pairs

USD/JPY fell sharply, slipping from 160.38 through 158, with the move tied less to confirmed Japanese intervention and more to traders’ fear of a repeat as the pair tests the familiar 160 area ahead of Friday’s US nonfarm payrolls.

Action Forex reports that the latest decline is smaller and more orderly than the end of July intervention, when the currency moved almost vertically from 163.97 to 155.22, a drop of roughly 8.75 yen, or more than 5%, after Japan intervened with US participation.

The key difference now, according to Action Forex, is that intervention is not directly driving the selloff, but “intervention anxiety” is influencing risk-reward for positions, making short-Yen exposure more likely to be reduced before any official action occurs.

Support for the yen also comes from rapid repricing of the Bank of Japan’s tightening path, with OIS pricing pointing to roughly 96.5 basis points of cumulative tightening over the coming 12 months, Action Forex adds, and a 2026 “regime change” framing in remarks by BoJ board member Hajime Takata.

Latest closeUSD/JPY 158.82 ▼0.9%

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