Key Takeaways

• Yen edges up: USD/JPY slipped 0.1% to 156.92, retreating slightly from an earlier climb to 155.69 amid thin holiday trading.
• Biggest weekly jump since February: The yen spiked roughly 1.5% against the dollar last week.
• $35 billion strike: Reuters reported Tokyo may have spent as much as 5.48 trillion yen ($35 billion) in yen-buying intervention — its first such move in two years.
• Strategic timing: Barclays analysts say authorities likely aimed to correct levels ahead of Japan’s Golden Week holidays, when thin liquidity could amplify one-way moves.
• 160 the line in the sand: Markets believe Tokyo is determined to keep USD/JPY below 160 yen this year.
• Limits to intervention: BCA Research warns intervention can “cap further yen weakness more than it can generate a lasting rally” given the unfavorable macro backdrop.
• Dollar firms marginally: The DXY rose 0.1% to 98.22, with the euro flat at $1.1722 and the pound down 0.1% at $1.3563.
• Trump’s Hormuz push: The president announced a new initiative to help vessels stranded in the Strait of Hormuz, with the U.S. establishing an “enhanced security area.”
• Auto tariff threat: Germany is in talks with Washington after Trump threatened to lift levies on European cars and trucks to 25%.
• RBA in focus: The Australian dollar slipped 0.1% ahead of a key Reserve Bank of Australia rate decision this week.

The yen was last up against the greenback by 0.1% at 156.92, unwinding slightly after climbing to 155.69. Much of those gains came during a brief window around midday Singapore time, or 04:00 GMT. Market holidays in Japan and Mainland China kept overall trading volumes muted.

Last week, the yen spiked versus the dollar by around 1.5%, marking its biggest weekly increase since February.

Market participants now widely believe that officials in Tokyo intervened in currency markets last Thursday, with the aim of keeping the dollar-yen pair under 160 this year, analysts have suggested.

“With Japan entering its Golden Week holidays through next Wednesday, liquidity is likely to be thin and price action more prone to one-way moves, so the authorities may have aimed to correct the level ahead of that period,” analysts at Barclays noted.

According to sources cited by Reuters, Japanese authorities did engage in yen-buying activity for the first time in two years, although the Ministry of Finance did not immediately confirm the report.

Reuters added that money market data from Friday suggested Tokyo may have spent as much as 5.48 trillion yen ($35 billion) on yen purchases last week.

Intervention’s Limits

“Intervention can cap further yen weakness more than it can generate a lasting rally, because the macro backdrop still works against the yen,” analysts at BCA Research wrote in a research piece.

“Oil prices are high, the Fed[eral Reserve] is not cutting [interest rates], Japanese real rates remain far below peers, and low implied volatility continues to support carry trades where JPY is used as the funding currency.”

Dollar Firms Marginally

Alongside movements in the yen, traders have also been closely tracking developments in the Iran war.

Over the weekend, U.S. President Donald Trump announced a new push to help vessels stranded in the Strait of Hormuz navigate out of the narrow waterway, although he did not provide many further details.

On Monday, the Joint Maritime Information Centers said the U.S. had established an “enhanced security area” south of typical shipping routes and instructed ships to work closely with Omani officials due to high anticipated traffic volume, the Associated Press reported.

The dollar index, which tracks the greenback against a basket of currency peers, was last up by 0.1% at 98.22. The euro was mostly flat at $1.1722, while the British pound slipped 0.1% to $1.3563.

Trade and Rate Decisions in Focus

Germany’s economy ministry has said it is in touch with Washington after Trump warned on Friday that he would increase levies on European cars and trucks to 25%.

Meanwhile, British markets are closed for a public holiday on Monday.

The Australian dollar — a proxy for risk sentiment — also slipped by 0.1%, ahead of a key Reserve Bank of Australia interest rate decision this week. Concerns have continued to swirl around the Iran war’s impact on price pressures in the country.