USDJPY Nears Key Highs as Markets Watch for Possible Official Intervention

USD/JPY remains firmly bid on Friday, consolidating above the 161.00 level after Thursday’s sharp advance carried the pair to 161.80, just shy of the four-decade high at 161.95 recorded in June 2024.

The pair continues to draw support from broad-based dollar strength and has maintained its bullish trajectory since clearing the key 160.00 threshold. Momentum was reinforced earlier this week after the Federal Reserve adopted a hawkish tone, signaling the possibility of an additional rate increase before year-end and widening the policy divergence between the United States and Japan.

Price action on Friday has so far been confined to a narrow range, forming a Doji candle on the daily chart. While this reflects a pause rather than a reversal in the prevailing uptrend, it also highlights growing caution among market participants as overbought conditions deepen and intervention risks remain elevated.

Japanese authorities have once again stepped up verbal warnings, with the Finance Minister reiterating that the government stands ready to take decisive action against excessive currency moves and further weakness in the yen.

Nevertheless, market participants remain divided over the likelihood and timing of intervention. Should authorities refrain from entering the market, the pair could remain on course for a sustained break above the 162.00 area, potentially opening the door to a fresh leg higher and new multi-decade highs.

For now, the broader trend remains firmly bullish, although increasingly stretched technical conditions and the threat of official intervention may limit the pace of further gains in the near term.

Res: 161.80; 161.95; 162.89; 163.57
Sup: 160.72; 160.51; 160.00; 159.11