USD/JPY

Thursday's dramatic yen surge to 157.97 appears to have been a suspected Japanese government intervention, but the BoJ's decision to hold rates unchanged has removed the fundamental floor under yen strength — the bounce back to 160.42 signals the intervention effect is already fading.

USDJPY is recovering sharply from the suspected BoJ-intervention low of 157.97, reclaiming 160.42 on a combination of the BoJ's no-change rate decision, persistent US-Japan rate differentials (Fed funds at 3.75% vs BoJ sub-1%), and USD support from geopolitical risk-off flows tied to US strikes on Iran.

Main Risk

Confirmed BoJ/MoF intervention with follow-through rate hike signal

If Japanese authorities confirm intervention and BoJ Governor Ueda signals an imminent July/September rate hike, USDJPY could retest the 157.97 intervention low and extend toward the 155.00 Fibonacci 50% retracement of the 2024 rally.