Dollar Breaks ¥160: Intervention Risk Revived Amid Oil Price Surge
The USD/JPY pair has broken past ¥160 for the first time since the latest coordinated intervention, sparking speculation that Tokyo and Washington may support the yen again. The pair previously climbed near ¥164 before official buying drove it as low as ¥155.20.
Japan spent a record ¥15.4 trillion supporting its currency between July 30 and August 26, with the US Treasury also participating in the intervention. However, most of that hard-purchased appreciation has already evaporated, leaving immediate resistance around ¥160.50 and support around ¥159.
The rate gap favors the dollar, with Fed Chair Kevin Warsh stating that policymakers still 'have work to do' unless inflation moves convincingly toward 2%. Markets have raised the probability of a September US rate increase to roughly 57%, pushing the rate-sensitive two-year Treasury yield to a one-month high near 4.33%.
The Bank of Japan's policy rate remains around 1%, leaving US short-term yields more than three percentage points higher. This encourages the carry trade, which could support the yen while making Japan's enormous government debt considerably costlier. Brent oil prices have jumped above $90 after US strikes on Iran's Larak Island triggered retaliation against American forces.