Yen Surges Past 162 as Dollar Weakens on Fed Uncertainty, Intervention Watch

The USD/JPY pair came under heavy selling pressure during Friday’s Asian session, sliding below the 162.00 handle as markets braced for potential Japanese government intervention to support the yen. Broad-based dollar weakness compounded the decline, marking a second consecutive day of losses for the pair.

The Dollar Index (DXY) slipped to a weekly low following the release of less-hawkish FOMC minutes, which exposed divisions among policymakers over the interest rate outlook. While traders still assign roughly a 65% probability to a Federal Reserve rate hike in September, the mixed signals have undermined the greenback’s near-term appeal.

Geopolitical tensions remain elevated after the U.S. military launched fresh strikes against Iran this week in retaliation for attacks on commercial vessels in the Strait of Hormuz. Iran responded by targeting American allies and striking U.S. installations in Bahrain and Kuwait. President Donald Trump declared Wednesday that the memorandum of understanding aimed at ending the Middle East conflict was effectively dead, keeping safe-haven demand for the dollar intact.

Japan’s heavy reliance on Middle Eastern crude — over 90% of its oil imports transit the Strait of Hormuz — adds an economic risk premium. Meanwhile, the wide yield gap between Japan and Western economies continues to discourage aggressive yen longs. Traders should exercise caution before assuming the USD/JPY has definitively topped out and positioning for extended downside.

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