Yen slides back toward 160 as traders test BoJ resolve ahead of rate decision

The dollar recovered 0.8% to 160.690 after a sharp intervention-driven rally, signaling that speculative pressure on the yen persists despite Tokyo's explicit warnings.

By Handelsavisen Newsroom · Automated 2026-07-31 02:43 UTC · 1 min read

The Japanese yen weakened against the US dollar on Friday, erasing much of the gains from a dramatic previous session.

The dollar climbed as much as 0.8% to reach 160.690 in early Asian trading, marking a swift reversal after the yen had surged 2.4% — its largest single-day advance since January 2023 — following reports of coordinated official intervention.

The rapid repricing suggests that market participants are actively testing the durability of Tokyo’s defense of the currency.

While the prior day’s move demonstrated the Bank of Japan’s willingness to deploy capital to stabilize the yen, the immediate pullback indicates that speculative selling pressure remains entrenched.

Traders appear to be probing whether the central bank will sustain its defensive posture or allow the currency to drift lower again.

This volatility unfolds against a backdrop of historic weakness for the yen, which has recently breached support levels that market participants had long viewed as a firm boundary for the Bank of Japan.