Bloomberg reported that yen watchers are bracing for dollar-yen to break through 161.95 — a level that would mark the weakest reading since December 1986 — after the currency slid to 160.80, its lowest since July 2024, as traders ramped up bets on a Federal Reserve rate hike. Japan's record ¥11.73 trillion ($73 billion) intervention window from late April through late May has been fully retraced, with the wide US-Japan interest rate differential keeping downward pressure on the yen intact.

"A test of 161.95 and a break is coming. It's not a question of if, but when," said Tony Sycamore of IG Australia. Chief Cabinet Secretary Minoru Kihara reaffirmed Thursday that Tokyo stands ready to act in FX markets at any time, though analysts say intervention at current levels would carry limited impact given broad dollar strength.

The Bank of Japan raised its benchmark rate to the highest level since 1995 this week, but markets remain unconvinced the pace of tightening is sufficient to arrest the yen's slide. JPMorgan's chief Japan FX strategist Junya Tanase said a move toward 162 is likely in coming weeks, particularly on strong US data or renewed Japanese fiscal concerns, and that such a test would likely trigger another intervention round.