- According to today's Wednesday trading, the value of the Japanese yen has fallen to over 155 yen against the US dollar, giving up about half of the gains it made last week even as Japanese authorities continue to warn markets against extreme currency moves.
- The USD/JPY exchange rate is hovering around the 155.35 resistance level at the time of writing this analysis.
Commenting on the performance of the Forex currency market, Japanese Finance Minister Shunichi Suzuki repeated a warning that the authorities are ready to respond to excessive fluctuations in foreign exchange rates. Meanwhile, the Bank of Japan Governor Kazuo Ueda said that they will study the impact of the Japanese yen’s movements on inflation to guide policy decisions. Last week, the Japanese yen rose as much as 5.2% from low to high due to suspected government intervention, with Bank of Japan data indicating it spent nearly $60 billion defending the currency.
At the same time, analysts said that the interventions would only buy the authorities for some time, given the stark differences in interest rates between Japan and the United States. For her part, US Treasury Secretary Janet Yellen also said over the weekend that interventions should be rare, and consultations should be held, indicating a lack of coordination between Japan and the United States on foreign exchange policy. In this regard, Marito Ueda, head of the market research department at SBI Liquidity Market, explained to Bloomberg News that it may be more difficult for Japan to intervene compared to the last time it did in 2022. He added, “At that time there was speculation that a rise in US interest rates would “It is over, and monetary policy expectations have never been as clear as now.”
In general, since the start of trading this week, the price of the Japanese yen has declined against the US dollar, with investors continuing to doubt that the Tokyo authorities will intervene in the foreign exchange market to support the currency. Although officials warned of possible market interference, traders ignored these reports. Masato Kanda, the Japanese government's top currency diplomat, has reportedly reinforced the authorities' willingness to intervene and support the fragile yen. However, he noted that the government would not have to intervene in foreign exchange markets if exchange rates reflected fundamentals.
USD/JPY Technical analysis and Expectations Today:
Recently, The Japanese yen flowed to 160.00, its lowest level against the US dollar since April 1990. Since the beginning of the year until now, the yen has decreased by 9.5% against the US dollar. Over the past 12 months, the yen has fallen by more than 14% against the dollar. As mentioned before, the upward trend of the US dollar against the Japanese yen “USD/JPY” may continue if the contrast persists between the policies of the US Federal Reserve and the Bank of Japan, alongside the economic performance disparity between the two countries. Currently, the nearest resistance levels for the currency pair are 156.30 and 157.40, respectively.
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