Is the Japanese Yen about to be pushed higher again? Recently, the USD/JPY has been rising for seven consecutive days, once surging past 159, and it seems Japanese authorities can’t sit still.

Not long ago, the Japanese government announced an additional budget to cope with rising commodity prices, which directly scared the market—30-year Japanese government bond yields soared to 4.2%, hitting a new high. At the same time, expectations for Federal Reserve rate hikes are also heating up, with the market now pricing in another rate increase before March 2027, which is another positive for the dollar. Under this double pressure, the yen has been depreciating.

But don’t forget, Japanese authorities are not to be underestimated. They intervened once in late April and early May, forcibly pulling the USD/JPY from over 160 back to around 155. The finance minister also issued a statement saying they are ready to act at any time to respond to excessive currency market volatility. The question is, can intervention alone save the yen? Bank analysts say that unless the Bank of Japan raises interest rates simultaneously, intervention will have limited effect.

Currently, the market prices about a 77% chance of a rate hike in June. If a rate hike does happen, the USD/JPY might still be pushed below 160 in the short term. But in the long run, Japan’s debt issues and the strong dollar mean the downward pressure on the yen remains significant.