July 31, 2026: Intervention, Bank of Japan, and Eurozone Inflation

The last trading day of July opened with a rebound in Asian markets and heightened yen volatility. According to Reuters, Japanese authorities likely bought yen and sold dollars on Thursday to halt the currency's slide toward roughly 40-year lows. Following the suspected intervention, USD/JPY fell from the 162-164 area to 158.

The Bank of Japan held its policy rate at 1.00%. The regulator gave no strong signal of imminent tightening, and the yen gave back part of its gains, moving back above 160.

The Nikkei 225 rose about 3.6% in early trading, reaching 64,075 points. The market drew support from the yen's stabilization and a rebound in the technology sector following strong earnings from Microsoft and Amazon. The Nasdaq gained roughly 2.8% the previous day, and futures were up another 0.7% this morning.

The next major event will be preliminary Eurozone inflation data for July. Germany's harmonized inflation accelerated from 2.4% to 2.8% the day before. A strong Eurozone-wide reading could support the euro and reinforce expectations of further ECB tightening.

Key Technical Levels

USD/JPY

After the sharp decline and subsequent rebound, the nearest resistance sits in the 160.70-161.00 zone, followed by around 162.00. A return above 162.00 could once again raise the risk of Japanese authorities intervening.

Initial support is located around 159.00-159.30. The next levels are near 158.00 and 157.50. As long as the pair stays below 161.00-162.00, the risk of another decline persists.

Nikkei 225

The index is testing the 64,000-point area after its morning surge. Nearest resistance sits around 64,500-65,000, followed by the 66,000 zone.

Support is located in the 62,500-63,000 zone. A deeper correction could push the index toward 61,000-61,500. Continued gains will depend on yen dynamics and sustained demand for technology stocks.

EUR/USD

The euro is trading around 1.1500, near a more-than-one-month high. Nearest resistance sits in the 1.1530-1.1550 range, followed by around 1.1600.

Support is located in the 1.1480-1.1500 zone, with the next level around 1.1435-1.1450. Eurozone inflation above forecast could help buyers test 1.1550-1.1600. Weak data could pull the pair back below 1.1500.

Main Scenario

The most interesting instrument of the day remains USD/JPY. The suspected intervention has already shown authorities' readiness to contain yen weakness, but the Bank of Japan's decision failed to provide the currency with lasting support. As a result, swings between 158 and 162 could remain sharp.

The Nikkei's rally reflects a return of risk appetite, but it also creates a conflicting picture: a yen that's too strong could weigh on Japanese exporters' stocks, while renewed yen weakness could raise the odds of another intervention.

For EUR/USD, the main catalyst will be Eurozone inflation.

By Born2trade market research department

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