- USD/JPY went above 160 but then dropped by 2.4% as the market reacted to Japanese authorities' intervention
- The forex pair rose in the last two sessions in succession and the market expects another intervention if the threshold is triggered
- Three dissenting votes in the recent interest rate decision by the BoJ is the highest under Governor Ueda's tenure
The USD/JPY pair pushed above the 160.00 psychological level in late April, but it ran into a wall. The pair sank a massive 2.4% on April 30, one of its more savage one-day falls in years, before a sustained recovery in early May. So, what exactly is happening to the world’s most watched currency pair?
What Happened on April 30?
The April 30 session started with the dollar already elevated. The USD/JPY reached an intraday peak of 160.73, moving beyond the previous intervention range of 160.23–160.45. This prompted a rapid and assertive reaction from Tokyo.
Finance Minister Satsuki Katayama indicated that authorities were approaching a point where decisive action on foreign exchange might be necessary, and Vice Finance Minister Atsushi Mimura’s subsequent remarks were widely seen by markets as a significant final warning.
On Thursday, the USD/JPY experienced a 2.25% drop following a dramatic intraday reversal that saw approximately 500 pips shed from the pair within a few hours. The daily trading chart showed a prominent upper wick, with the closing body near the lows around 156.65. This 3.22% swing from peak to trough represented the most aggressive single-day decline observed in over three years.
The Quick Rebound No One Saw Coming
After the steep drop, gains returned to the dollar across the next pair of trading days. Near 157 to the dollar, the Japanese yen stayed steady Monday, pausing following last week’s strong surge, likely spurred by hints of official interference. The BoJ left its policy rate unchanged at 0.75%, but the decision was not unanimous. Three dissenters voted for a hike, the biggest internal opposition under Governor Ueda.
While this recovery provides a degree of comfort for those holding dollar positions, the overall perspective remains complex. Underlying fundamental differences still suggest potential for upside in USD/JPY over time. However, the ongoing risk of intervention around the 160 level establishes a strategic resistance point.
Investors and traders engaged in carry trades need to carefully assess the potential for sudden volatility against the benefits of longer-term rate differentials. For those anticipating an uninterrupted return to the uptrend, it might be prudent to moderate expectations, given Tokyo’s clear readiness to intervene.
USDJPY Forecast
Immediate resistance for USD/JPY stands at 158.00, with the next one likely at 158.65, aligning with the 50-day SMA level . On the downside, support is firm at 156.60, and a break below that will invalidate the upside narrative. An extended control by the sellers could send the pair lower and test 155.90.
USD/JPY daily chart on May 5, 2026 with the key levels of support and resistance. Created on TradingView
The drop was caused by suspected intervention from the Japanese Ministry of Finance. Authorities likely sold billions of US dollars to buy yen after the pair breached 160.00, aiming to punish speculative short-sellers.
Although the dollar is showing gains, it encounters substantial resistance. The rebound reflects the underlying yield advantage of the dollar, but the Bank of Japan has signaled it will defend the 160.00 level aggressively with its massive reserves.
Bilateral FX discussions between Finance Minister Katayama and Treasury Secretary Bessent have already taken place. Any formal or informal coordination that limits US objection to yen support would materially cap USD/JPY’s upside
