The U.S. dollar hit a fresh 34-year high against the yen in subdued trade on Monday, with market participants taking their cue from the Federal Reserve’s higher-for-longer interest rate stance, even as they remained alert to any signs of intervention by Japanese authorities to prop up the struggling yen.

The dollar hit a fresh 34-year high of 154.85 yen versus the Japanese currency and was last up 0.1% at 154.81 yen, a whisker away from the 155-level that is next on traders’ radars for possible intervention.

The yen hit its fresh lows ahead of the Bank of Japan’s (BOJ) policy review on Friday.

Market players have been largely aware that Japan has refrained from intervening in the market despite the yen hitting several 34-year lows this year.

“I think that the MOF (Ministry of Finance) has acknowledged that the currency fundamentals have been moving in the wrong direction, i.e. dollar yen has been going higher because U.S. yields have been going so much higher,” said Calvin Tse, managing director and head of Americas macro strategy at BNP Paribas (OTC:BNPQY) in New York.

“I think they’ve been very wary to stand in the way of that. However, if we see an environment where let’s say U.S. yields start to weaken … then that provides them at least in their (MOF) minds with a window of opportunity to act. So long story short, I don’t think they will be intervening if the … driver of dollar yen higher is higher U.S. yields,” he added.

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