Yen Weakens as Markets Test Tokyo's Resolve Ahead of BOJ Decision

The Japanese yen has come under renewed pressure after a coordinated intervention to prop up the currency. The Bank of Japan's policy decision is eagerly anticipated, and analysts expect it to keep short-term interest rates steady at 1%.

Japan conducted market intervention in the New York session overnight, pulling the sagging currency from four-decade lows. Speculators have amassed large bearish bets on the yen, with net short positions worth $11.65 billion, near the highest in two years.

BOJ's decision follows the U.S. Federal Reserve's decision to leave interest rates unchanged, which has left the dollar on the defensive. The U.S. dollar index is down 0.8% and heading for a 1.3% drop for the week and a 1% loss for the month.