Woofun AI reports that the Japanese yen is hovering near a 40-year low against the US dollar, reaching 161.12 on Friday, despite the Bank of Japan raising interest rates to a 31-year high last week and multiple interventions by the Japanese Ministry of Finance this year.

The yen's decline is exacerbated by Federal Reserve Chair Kevin Warsh's hawkish stance and persistent weakness in Japan's core inflation, which has remained below the BOJ's 2% target for four consecutive months.

Concurrently, market concerns regarding Japan's fiscal health have intensified following Prime Minister Taro Aso's spending plan. DBS Bank noted that short yen positions remain largely open, suggesting Japan's tolerance for depreciation is nearing its limit, with potential intervention expected near the 161.95 level.

Meanwhile, CME FedWatch data indicates the probability of a 25 basis point Fed rate hike in July has surged to 38.5%, up from 8% a week ago, further bolstering the dollar.