Japan's Kihara: Yen Urgent as US Jobs Report Caps Dollar

Japan's intervention is the main counterweight. The government spent roughly $60 billion in late April and early May to prop up the yen. Traders said the risk of another round is highest when liquidity is thin, as it is heading into the US market close ahead of the weekend.

The softer jobs report also shifted expectations for the Federal Reserve. Futures now price a higher chance of a rate cut in September, which would narrow the US-Japan rate differential. That dynamic has been the core driver of the yen's slide.

The dollar's winning trade is showing signs of exhaustion, a dynamic AlphaScala explored in a recent analysis. The next catalyst could come from Japan's July policy meeting, where the BOJ may decide to reduce bond purchases. That would offer the yen a rare fundamental tailwind, one not dependent on intervention.

Kihara's comments Friday reinforce the message that Tokyo is ready to step in if the yen weakens too quickly. For now, the pair is caught between fundamental pressure and intervention risk. A sustained break below 160 would require a material shift in the US rate outlook or a BOJ policy surprise.