Yen Jumps Third Day as Traders Eye More BOJ Intervention

The Japanese yen climbed for a third straight session on Monday, keeping traders on edge for signs of fresh yen intervention after Tokyo and Washington jointly stepped into the currency market last week to defend Japan’s battered currency. The move came as oil prices sank more than $4 a barrel following President Trump’s decision to hold off on a new strike against Iran, pulling support away from the safe-haven dollar.

Yen Intervention Fears Keep Traders on Alert

The yen advanced not just against the dollar but also the euro and sterling on Monday, reviving speculation that Japanese authorities could step back into the market. Japan’s finance ministry confirmed it coordinated a joint yen-buying operation with the United States on Friday, and Bank of Japan data suggests Tokyo may have spent close to $59 billion defending the currency last week alone.

The yen touched a three-month high of 155.20 per dollar during Asian trading hours before paring gains to trade at 156.65, up 0.45% on the day. That follows a rally of more than 3% over the final two sessions of last week — one of the sharpest short-term moves for the currency this year.

“Dollar/yen 1.5-2 standard deviations above the long-term trend have been a useful guide for identifying when intervention risk enters the danger zone,” said Stephen Spratt, APAC rates strategist at Societe Generale.

SMBC chief forex strategist Hirofumi Suzuki pointed to a broader unwind of short-yen positioning as the real driver behind Monday’s surge, noting that a substantial build-up of bearish bets tends to accelerate appreciation once it starts to reverse.

Oil Slides as Trump Holds Off on Iran Strike

Crude prices fell sharply Monday after Trump confirmed that planned strikes on Iran had been called off, with talks between the two nations set to resume. Brent crude dropped 5.2% to $83.39 a barrel, while West Texas Intermediate shed 6.2% to $79.45 — a dramatic reversal after weeks of war-driven gains. Iran, for its part, said it is not currently holding active talks with Washington, adding a layer of uncertainty to how durable the de-escalation will prove.

Falling energy prices are expected to weigh more heavily on large importers like the eurozone and Japan, while the U.S. economy is seen as comparatively insulated from oil-driven shocks. Treasury yields eased alongside oil, with the benchmark 10-year yield slipping 6 basis points to 4.68% as inflation anxiety cooled slightly.

Dollar Index Steady as Fed Rate Path Stays in Focus

Despite the drop in oil, the dollar index was little changed at 99.79 Monday, after sliding more than 1.5% the previous week. The euro edged up 0.03% to $1.1525, having touched an 18-month high of $1.1559 in Asian trading.

“It seems the only way the Fed can avoid hiking in September is if the U.S. data is poor enough,” said Chris Turner, global head of forex at ING.

Turner argued that falling oil prices should, in theory, weigh on the dollar — but the currency’s resilience reflects unresolved questions over whether the Fed could still hike rates in September if inflation data proves stubborn. This week’s jobs report is expected to be a critical input into that decision.

What Comes Next for the Yen

Barclays analysts caution that even if the yen strengthens further in the near term, longer-term downward pressure remains firmly in place, driven by the Bank of Japan’s gradual approach to tightening and persistently wide yield differentials with the rest of the world. Goldman Sachs strategists have suggested that encouraging capital repatriation — rather than one-off intervention — is the most powerful lever Japan has for influencing the currency over the long run. Market participants also flagged Japan’s expansionary fiscal policy as an ongoing drag on the yen’s outlook.

For a deeper look at how the AI trade and yen volatility have been colliding in recent weeks, see our earlier coverage: Global Stocks Rally as Microsoft and Amazon Earnings Revive AI Optimism, Yen Remains Volatile. And for context on how the Iran conflict has whipsawed energy markets, read US Iran Talks Oil Prices Crash: 7 Powerful Market Shifts Investors Must Watch.

Our earlier report on the dollar’s strength ahead of the Fed meeting also remains relevant background: Markets Today: Nikkei Sets Record, Brent Crude Falls to $79, Gold at $4,163 as Dollar Surges.

Key Takeaways

• The yen rose for a third straight session, hitting a three-month high of 155.20/dollar before settling near 156.65.
• Japan and the U.S. confirmed coordinated yen-buying intervention on Friday, with Tokyo spending an estimated $59 billion.
• Brent crude fell 5.2% and WTI fell 6.2% after Trump called off a planned Iran strike.
• The 10-year Treasury yield eased to 4.68% as inflation fears cooled.
• All eyes now turn to this week’s U.S. jobs report as a key input for the Fed’s September decision.

Source: Reporting by Stefano Rebaudo and Rae Wee for Reuters, “Yen climbs for third straight session with traders on alert for intervention,” August 3, 2026. Read the original report on Reuters.

About the author: Laura Anderson is a markets and currency correspondent at Daily Finance, covering FX intervention, central bank policy, and global macro trends.

Analysts widely expect further yen intervention if the currency reverses course again, since Tokyo has signaled zero tolerance for another disorderly slide. The scale of this week’s yen intervention already ranks among the largest of the year, and traders say the threat of renewed yen intervention alone may be enough to keep speculators cautious in the sessions ahead.

For now, the yen intervention narrative remains the single biggest swing factor for USD/JPY traders this week.