Japanese officials have just issued a verbal warning, and after a "feint" by the yen, the currency has further depreciated, raising questions about when the authorities will intervene.

On Wednesday, the yen's exchange rate broke through the level at which Japanese authorities intervened in the foreign exchange market in April, sparking speculation that they may soon be forced to support the yen again.

Before the US market opened, after the Chief Foreign Exchange Officer of Japan, Masato Kanda, issued another verbal warning, the US dollar against the yen fell sharply by 40 points in the short term, but then quickly rebounded, reaching a new high since 1986.

Affected by the weakness of the yen, the US dollar index touched 106, the first time since May 1st.

The strength of the US dollar has dragged down precious metals, with spot gold breaking below the $2300 mark.

Spot silver fell by 1% during the day.

Masato Kanda recently said that he is very concerned about the recent sharp depreciation of the yen and will take appropriate measures to deal with foreign exchange issues as needed.

He pointed out that the current yen fluctuation is undoubtedly one-sided.

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Since the beginning of this year, the yen has depreciated by more than 12%, leading to an increase in import prices, harming the interests of Japanese consumers, and making businesses increasingly uneasy.

Despite Japan raising borrowing costs, the huge interest rate gap between the US and Japan still puts pressure on the yen.

The next major pain point for the yen may come from the reading of the inflation indicator favored by the Federal Reserve on Friday, which is key to its monetary policy outlook.

Erik Nelson, a macro strategist at Wells Fargo in London, said: "The recent remarks of the Japanese Ministry of Finance indicate that concerns have increased."

He expects officials to wait until the US dollar against the yen rises to 165 before entering the market.

Banks, including Bank of America, also believe that this level is the new "bottom line" for the authorities.

Japan faces significant risks, having spent a record 9.8 trillion yen ($61.1 billion) in recent rounds of intervention.

Citigroup estimates that the country has $20 billion to $30 billion in funds to finance any action.

However, so far this week, the response of Japanese officials has been limited to verbal warnings.

Previously, Japanese Finance Minister Shunichi Suzuki said that they are closely monitoring market developments and will take all possible measures as needed.

Masato Kanda warned on Monday that the authorities are prepared to intervene around the clock if necessary, while reiterating that they are not targeting a specific level for intervention.

Win Thin, head of global market strategy at Brown Brothers Harriman & Co in New York, said: "If the yen's volatility starts to become chaotic above the 160 level, Japanese authorities may intervene to smooth the trend of the currency pair.

Buying US dollars against the yen before the Bank of Japan takes a tougher stance has the least resistance."

Cameron Crise, a macro strategist at Bloomberg, said that according to his model, the level around 161 or slightly above 161 is still the threshold at which Japanese authorities are most likely to intervene.

Japan's previous efforts to support its currency have attracted overseas attention, with the US Treasury Department last week placing Japan on the "monitoring list for currency manipulation."

Although the US has not designated Japan (or any other trading partner) as a currency manipulator, US officials wrote that "intervention should only be carried out in very special circumstances and after proper prior consultation in large, freely traded foreign exchange markets."

However, US data released on Friday may ease some of the pressure on the yen.

Economists predict that the core personal consumption expenditure (PCE) inflation rate will slow down in June, which may strengthen the Federal Reserve's reason to reduce borrowing costs this year.

Many strategists say that the volatility in the foreign exchange market is still relatively low, making it difficult for authorities to intervene at the moment.

For most of the month, the one-month implied volatility of the US dollar against the yen has hovered below 9%, a significant drop from the 12.4% at the end of April.

Roberto Cobo Garcia, head of G-10 foreign exchange strategy at Banco Santander in Madrid, said: "Considering the demand for dollars at the end of the quarter and the fact that market volatility is still under control, Japanese authorities may wait a little longer before intervening.

If they are to intervene again, volatility needs to rise further."