USD/JPY Faces Dual Declines Amid Intervention Speculation

Markets:

• GBP leads, EUR lags
• WTI crude oil down $1.65 to $74.20
• Nasdaq down 1.4%
• Gold up $24 to $4,185
• US 10‑year yields up 6 bps to 4.51%

The focus was on USD/JPY after Friday’s weekly close hit its highest level since 1986, though it had not surpassed the 2024 intraday high of 161.99. The pair approached 161.92, then fell sharply to 161.20, rebounded to 161.77, and slid again to 161.08—a pattern suggesting possible intervention. Nevertheless, traders pushed the pair back up to 161.58 as Asian markets opened.

The dollar remained strong across the board as Treasury yields climbed 5‑6 bps across the curve. Two‑year yields reached a fresh 14‑month high of 4.23%, even as oil prices slipped another 2%. The bond market continues to price in a hawkish stance from the Fed, with expectations of about 42 bps of rate hikes by year‑end.

Equity markets opened higher, but a pullback in large‑cap tech stocks—led by Google—dampened the rally. The S&P 500 closed down 0.4%, while the Russell 2000 posted a 0.8% gain, highlighting a notable divergence from bond market trends.

In other FX news, the pound was the only major currency to outperform the dollar, buoyed by reactions to Keir Starmer’s resignation. Attention will remain on the yen as traders await any official confirmation of intervention.

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