Yen Fades Back to 160 Threshold as Traders Refocus on Rate Gap

The Japanese yen has given back nearly half of its gains from a historic US-Japan coordinated intervention just weeks ago, as traders refocus on the wide interest-rate gap between the two economies.

The currency weakened to 159.39 per dollar on Tuesday before ending the session little changed at 159.28, putting market participants on high alert for another potential round of official action.

If USD/JPY were to break decisively above the psychologically important 160 level, concerns about intervention could intensify further, according to Masayuki Nakajima, senior strategist at Mizuho Bank.

The yen suffered its worst single-day drop since mid-February on Monday and has now largely walked back a substantial portion of the rally that followed the joint effort by Japan and the United States.