‘Crazy’ Yen Rise Risks Being Broken as Early as Wednesday

Investors have rushed to buy the yen in recent weeks, betting that interest rates could move in Japan’s favor. They will face a moment of truth on Wednesday.

The yen has climbed about 5% against the dollar since it began rallying on July 11, a rise amplified by alleged intervention by Japanese authorities in markets. After swinging between gains and losses in Tokyo and London on Friday, the yen rose as much as 0.5% in New York before paring its advance.

But some investors warn that this recovery is fragile, as demonstrated this week when the yen quickly retraced its advance after better-than-expected U.S. economic growth figures were released on Thursday.