The Japanese yen weakened further on Monday, giving back half of the gains triggered by the historic joint intervention from the United States and Japan. The currency fell as much as 1% against the U.S. dollar, reaching 159.35, making it the worst performer among the Group of Ten currencies that day. This decline erased half of the yen's recent rally from the intervention, a significant psychological threshold for traders closely monitoring official support.

"Without fresh intervention, it will continue to slide," said Lee Ferridge, a strategist at State Street. "It seems the market is disappointed not to see more action." After the yen hit a nearly 40-year low near 164 against the dollar, Japan and the U.S. earlier this month launched their first joint yen-buying operation since 1998. The move briefly strengthened the yen to around 155, but the rally has since faded.

The reversal highlights the limitations of intervention in altering the overall trend, as the underlying drivers of the yen's depreciation remain largely unchanged. Despite warnings from Tokyo and Washington that they are prepared to act again if necessary, a wide interest rate gap with the U.S., concerns about Japan's fiscal outlook, and geopolitical uncertainties continue to pressure the yen.

"We believe the market's relatively muted response to the intervention reflects the root causes of currency weakness," said Kamakshya Trivedi and other strategists at Goldman Sachs in a report. "Unless global conditions change or unexpected policy shifts occur, depreciation pressure will likely re-emerge over time." Tuesday is a public holiday in Japan, and traders worry that reduced liquidity could create conditions for another round of intervention. Nevertheless, recent moves appear unlikely to reverse the yen's weakness, as it faces major headwinds like fears of increased Japanese fiscal spending.

"Japan is observing the Obon holiday, which may limit market participation, and the domestic event calendar is relatively light," wrote Yujiro Goto, a strategist at Nomura Securities, in a note. "The focus will remain on the intervention stance of Japanese and U.S. authorities, with investors closely watching officials' statements."

For Alex Cohen, a foreign exchange strategist at Bank of America, a stronger yen would require either "more forceful" intervention or a signal from the Bank of Japan that it will raise rates in September. Traders currently price in about a 63% chance of a September rate hike, while the probability of an October increase is almost fully priced in.

"Unless there is more powerful policy action to follow, I am skeptical of a significant yen appreciation," said Paresh Upadhyaya, a strategist at Pioneer Investments. "A single rate hike in September is simply not enough."