Forex
USD/JPY Surges Amid Hawkish Fed and Dovish BOJ Hike, Intervention Risk Looms
The USD/JPY pair saw its strongest weekly gain since October 2025, thanks to a hawkish Federal Reserve and a dovish Bank of Japan hike. The pair surged over five big figures from its earlier lows this month.
However, the speed of the rebound has raised concerns about renewed intervention activity. A suspected rate check by Japanese authorities near 158 on Friday led to a sharp drop in the pair, followed by a thin holiday period in Japan that will leave market liquidity low.
The five-day correlation between USD/JPY and US 2-year yields rose to +0.98, indicating a strong link between the two assets. Yen positioning records show its largest three-week reversal on record, suggesting widespread short covering drove part of the pair's unwind.