USD/JPY retreats as Japan warns on excessive FX moves

• USD/JPY snaps a six-day winning streak as intervention warnings lift the Yen.
• Japanese officials step up verbal warnings as the pair nears the 160.00 zone.
• Mixed US data and Fed commentary keep the Dollar on the defensive.

The Japanese Yen (JPY) strengthens against the US Dollar (USD) on Wednesday after fresh warnings from Japanese authorities revived speculation of possible intervention to curb excessive Yen weakness.

At the time of writing, USD/JPY trades around 158.15, snapping a six-day winning streak after climbing past 159.00 earlier in the day, its highest level since July 2024.

Japanese Finance Minister Satsuki Katayama said on Wednesday that authorities 'will take appropriate action against excessive currency moves without excluding any options,’ warning that the recent slide in the Yen is ‘extremely regrettable’ and ‘deeply concerning.’ She added that current moves in the FX market ‘have nothing to do with fundamentals.’

Japan’s chief currency official Atsushi Mimura echoed Katayama’s comments, saying that ‘what’s most problematic is volatility and whether the moves are deemed appropriate in light of economic fundamentals.’ He added that if they are not, ‘it would mean the moves are driven by speculation, so we’ll need to take action.’

The remarks come as USD/JPY nears the 160.00 handle, a zone that previously triggered official action. The latest bout of Yen weakness has been fueled by domestic political uncertainty, after reports suggested Prime Minister Sanae Takaichi may dissolve the lower house and call a snap general election as early as February.

Meanwhile, US economic data released earlier Wednesday failed to lift the Greenback, adding to downside pressure on USD/JPY. Mixed Producer Price Index (PPI) signals and firm Retail Sales kept the reaction muted, with markets pricing in two Federal Reserve (Fed) rate cuts this year.

Philadelphia Fed President Anna Paulson said she sees further rate cuts later this year if the forecast is met. She added that inflation is expected to moderate in 2026 and the labor market to stabilize, noting that the job market is “bending but not breaking.”

Looking ahead, the US economic calendar is light on Thursday, with weekly Initial Jobless Claims and the New York Empire State Manufacturing Index due. In Japan, Producer Price Index data are also scheduled for release.