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Yen Traders Brace for Intervention as Market Liquidity Thins

Currency traders are on high alert for potential intervention by Japan as the yen weakens against the dollar. The yen has declined roughly 1% this week, trading near 158 per dollar, prompting expectations that Japanese authorities may act to support the currency. A rally Thursday suggested traders already anticipate possible policy action. Monday's holidays across major financial centers reduce overall market liquidity, which amplifies the potential impact of any official moves. Thinner trading conditions can exacerbate currency swings and make central bank intervention more effective at moving markets. Japanese officials have signaled concern about yen weakness, which affects exporters and inflation dynamics. Traders are positioning defensively heading into the week, wary of sudden policy announcements that could roil currency markets.