The Japanese Yen remains under pressure despite the Bank of Japan’s latest rate hike, with HSBC arguing that US Dollar strength is overwhelming any support from tighter Japanese monetary policy.

USD/JPY traded near 161.70 on Thursday, close to its highest level of 2026 after climbing more than 1.5% during June. The pair has now moved above the level that previously triggered Japanese currency intervention without provoking a fresh response from authorities.

HSBC says the recent move above previous intervention levels shows there is “no magic number” that automatically triggers action from Japan’s Ministry of Finance.

“USD-JPY has moved above prior FX intervention levels without renewed action.”

The bank believes policymakers are unlikely to stand in the way of broad US Dollar strength, even though intervention risks remain higher for the Yen than for most other currencies.

“Policymakers are unlikely to stand in the way of broad USD gains.”

HSBC argues the Bank of Japan’s recent rate hike is symbolically important but too modest to fundamentally alter the interest-rate gap with the United States.

“The Fed story is more dramatic, likely ensuring USD dominance.”

Yen Forecast Update

HSBC expects the intervention threat to remain the Yen’s main source of support rather than monetary policy.

“Intervention is the only meaningful source of potential support for the JPY.”

The bank believes USD/JPY is likely to stay elevated over the coming weeks, although the Yen could outperform currencies such as the Euro and Swiss Franc on the crosses if intervention risks increase.