Traders unwound short yen positions amid fears of stealth intervention by Japanese authorities following mixed US jobs data.
USD/JPY retreated to the 160.50 support zone after a suspected intervention by Japanese officials spurred a sharp yen rally. The move followed a US nonfarm payrolls report that, while not weak, prompted a dovish repricing of Fed rate hike expectations, with July odds falling to 17% from 30% pre-release.
The yen’s surge occurred early in the European session as speculators covered positions, fearing unannounced intervention. Japanese officials indicated a shift to targeting speculators without prior warnings, adding uncertainty to short yen trades. The US dollar remains under pressure ahead of the July 14 CPI report, which could sway Fed policy expectations.
Market focus now centers on US inflation data, with an upside surprise potentially lifting the dollar and pressuring the yen further. For now, the 160.50 level is seen as a key battleground for buyers and sellers.