USD/JPY Approaches 161.60-161.95 Intervention Zone

USD/JPY is trading near the 161.60-161.95 intervention zone as the two-year US Treasury-Japanese Government Bond yield spread has widened and futures traders increase the odds of a Federal Reserve rate rise later in 2026.

The 2-year US Treasury-JGB spread expanded from about 2.12% in February to roughly 2.72% on June 9. Futures market pricing shows about a 61% probability of a 25-basis-point Fed increase in October 2026. Market participants are watching the US consumer price index release on June 10 for data that may affect Fed expectations and dollar demand.

The Bank of Japan is widely expected to raise its short-term policy rate by 25 basis points at its June 15-16 meeting, taking the rate from roughly 0.75% to about 1.00%. At the same time, the BoJ appears likely to slow or pause its bond-purchase taper next fiscal year and may hold monthly purchases near 2.1 trillion yen to limit higher debt-servicing costs after the 10-year JGB yield recently reached about 2.8%.

On the charts, the pair has followed a medium-term ascending wedge since the January low, with the wedge’s upper boundary around 161.60-161.95. Price action also sits in a shorter rising channel from the May 29 low. Near-term resistances are at 160.65 and 161.14-161.20; immediate support is around 159.75, with lower supports near 159.45 and 159.10. Hourly momentum indicators remain above neutral levels.

Japanese authorities intervened in foreign exchange markets at the end of April and early May, buying about $74.1 billion of yen between April 30 and May 6, according to Finance Ministry data. On April 30, Vice Finance Minister Mimura issued a “final verbal warning” to speculators before direct intervention took place that day. The prior intervention area around 160.40-160.70 remains a reference point for markets and officials.

Market participants point to rising energy costs linked to the Middle East conflict and domestic political and fiscal considerations in Japan as factors affecting inflation readings and central bank choices. Traders are monitoring incoming US data and the BoJ meeting for information likely to influence yield spreads and USD/JPY direction.