Traders are bracing for potential yen intervention by Japanese authorities this week. Prime Minister Sanae Takaichi warned of action against abnormal currency moves. The dollar-yen pair has weakened, raising the specter of rare coordinated action, possibly with U.S. backing, to stem the yen's slide.

The yen's persistent weakness stems from the wide interest rate gap between Japan and the U.S., with the Bank of Japan maintaining ultra-low rates while the Federal Reserve holds high. A weaker yen inflates import costs and corporate expenses, pressuring the government to act to stabilize the currency and protect the economy.

Market focus will now shift to the Ministry of Finance's actions and any signals from Washington. A coordinated intervention could provide a temporary floor for the yen, but sustaining it requires broader policy shifts. Investors will watch for concrete steps rather than just warnings from Tokyo.