Japan’s suspected currency intervention and a hawkish Bank of Japan stance drove USD/JPY down nearly 5 big figures before a partial rebound.
USD/JPY fell sharply to 158.00 on suspected Japanese foreign exchange intervention before recovering near 161.00, then dropping again to 158.55. The move followed a hawkish hold by the Bank of Japan (BoJ), which kept its policy rate at 1.00% but signaled further tightening ahead.
The BoJ maintained its hawkish bias, stating it will continue raising rates, while swaps now price a 40% chance of a September hike, up from 20%. The central bank’s updated Outlook Report suggests a faster normalization path toward its 1.10%-2.50% neutral range, despite only 50bps of tightening since December 2025.
Japan’s Ministry of Finance released its July report on FX intervention operations, covering June 29 to July 29, adding to speculation over recent market moves.