Thin trading due to Japan’s Mountain Day holiday fuels speculation of potential currency intervention amid the Yen’s retreat.
USD/JPY held near 159.30 in Asian trading Tuesday, consolidating after a 1% gain the prior day. Low liquidity, driven by Japan’s Mountain Day holiday, kept the pair in tight ranges as investors weighed potential intervention risks.
The Yen has retraced roughly half of its recent intervention-driven rally, testing policymakers’ resolve. Japan’s passive stance—avoiding joint intervention despite soft US jobs data—signals a strategy to slow, not reverse, the Dollar’s rise. Short-Yen positions remain near early 2024 highs.
Analysts suggest the holiday could offer authorities a strategic window for action. Meanwhile, the Bank of Japan may consider a September rate hike to counter inflation, driven partly by AI-related demand pressures.