Intervention Fears
The case of USD/JPY is further complicated by the Japanese government and BoJ’s habit of directly intervening in foreign exchange markets to prop up the Yen.
A quick glance at the charts will immediately suggest to the observer that the current level in the 151s is a level that has rejected price multiple times in the past – both in 2022 and 2023. This is no coincidence.
The Japanese authorities have repeatedly said they will not tolerate the Yen weakening above this level as it harms businesses. So they tend to intervene at around the 150-152 band.
On Tuesday the Japanese Finance Minister Shunichi Suzuki said the authorities would not rule out any measures in dealing with excessive Yen moves, repeating warnings made in his previous statements, according to TradingEconomics. This has been interpreted by markets as a verbal intervention, however, a physical intervention is likely not far off if the USD/JPY tests 152 or higher.
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