The USDJPY exchange rate is climbing again, prompting warnings from the Bank of Japan.
USDJPY – Weekly Chart
The USDJPY has been slowly recovering from the tariff-driven lows in April and is now targeting the previous highs. The first sign of resistance is around 2.7% from current levels ahead of 158.00.
Finance Minister Satsuki Katayama has issued another warning to traders following recent moves in USD/JPY.
“I’m seeing one-sided and rapid moves in the currency market,” Katayama said on Tuesday. “There’s no change in our stance of assessing developments with a high sense of urgency,” she added.
The central bank intervened in the currency market in 2024 as the pair moved above the 160.00 level. There is a risk that the bank moves in again, but U.S. investment banks do not see that happening very soon.
Goldman Sachs and Bank of America analysts see little immediate risk of intervention, saying the usual triggers “have not yet been met”.
The yen “does not appear to be at particularly weak levels,” Karen Reichgott Fishman wrote in a note this week.
BofA’s Shusuke Yamada joined that assessment, saying the dollar-yen above 155 is “unlikely to trigger imminent intervention in the absence of excessive volatility or a build-up in speculative positioning”.
Markets are reacting slowly to the new Prime Ministerial appointment in Japan. A 4% drop against the USD in October made the yen the worst-performing G-10 currency. The selloff came after markets digested Prime Minister Sanae Takaichi’s move toward fiscal expansion and dovish monetary policy. The currency also weakened after the BOJ held rates steady last week, with Governor Kazuo Ueda giving traders little guidance on future hikes and saying the central bank wasn’t at risk of falling behind in its monetary policy.
The U.S. dollar has gotten a boost from the recent comments given by Fed Chair Jerome Powell. The U.S. bank raised rates in its October meeting, but is split on the need for a December hike.
