The yen edged higher after Sanae Takaichi said authorities were monitoring markets and wanted orderly currency trading, a warning that markets read as a possible signal of intervention as the currency neared 160 per dollar.

Takaichi declined to discuss foreign exchange directly, saying currency rates reflect multiple factors and that economic and fiscal policy is not designed to steer them, while the government continues to monitor markets.

She also said she was in contact with US financial authorities, leaving open the possibility of coordinated action; a similar move helped support the yen in late July.

Japan has intervened before, acting on three days between July 30 and August 3 and spending a record 15.4 trillion yen as the currency approached 164 per dollar, its weakest level in 40 years.

The yen remains under pressure from a stronger dollar and widening rate expectations: markets have begun pricing a 13.3% chance of a 50-basis-point Federal Reserve increase at its December 9 meeting, after officials cited persistent inflation and discussed further hikes.

The Bank of Japan, meanwhile, has opened the door to additional rate increases and is expected to raise rates in December, following its October declaration that it had effectively overcome deflation.

But dovish comments from Bank of Japan official Taichiro Asada, who cautioned that raising borrowing costs too quickly could harm the economy, have also weighed on the yen.

The currency’s weakness is raising the cost of imported fuel and commodities, squeezing Japanese households and adding pressure on Sanae Takaichi’s administration and the Bank of Japan; Japan’s yen-based import price index rose 24.8% year over year in October.

Technically, USD/JPY has a near-term bullish bias while above 158.97, its 100-day moving average; 159.79 is immediate support and 161.64 is the next key resistance.

A sustained move above 161.64 could put the 164.00 cycle high back in view, while a drop below 159.79 would expose support levels at 158.97, 158.49, 157.20, 155.59 and 152.99.

Middle East risks could bolster safe-haven demand for the US dollar, and the article suggests that declines in USD/JPY may attract buyers despite the threat of intervention.

The competing forces make the yen difficult to trade: interest-rate differences are proving less reliable, while Bank of Japan tightening, persistent capital outflows and the possibility of intervention pull the currency in different directions.