USD/JPY daily chart
This may be a quieter start to the new week, but this is the week to watch as events can speed up. After the intervention in late April, the spotlight is now back on Japanese officials. Will they intervene at 160.00 again? Or will they lower the yen intervention threshold, as happened previously over the past two years?
Finally, Japan has failed to convince markets of a change in the narrative in fundamentals.
To be sure, the Bank of Japan has finally ended its negative interest rate policy experiment. But the promise was much more than that. Yen bulls have already been very disappointed with Ueda’s lack of aggressiveness in 2023 and it looks like that will extend into 2024 as well.
As inflationary pressures ease, this makes it difficult for the Bank of Japan to be persuaded to tighten policy further – at least for now. Things may continue to improve later in the year, but policymakers are mainly relying on hope for change.
Until that actually appears, it does not look like the pressure on the yen will ease.
So the ball is now back in the court of the Ministry of Finance and the Bank of Japan. Do you intervene again at 160 or do you let it reach the next threshold?
