USD/JPY pulls back as intervention rhetoric rises – OCBC

The recent rise in USD/JPY is slowing with the pair falling on Friday. Intervention rhetoric is getting louder and more frequent. Pair was last seen at 156.76 levels. Finance Minister Katayama told a news conference after cabinet meeting last Fri that officials are concerned that JPY depreciation is extremely one-sided and rapid, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Katayama signals concern over rapid Yen depreciation

"We believe the risk on leaning against the wind is real if we do see another sharp weakening in the JPY towards the 158-160 zone. A combination of fiscal policy shifts, monetary policy delays, and geopolitical uncertainties are some factors that has underpinned JPY weakness with potential intervention only acting as a limited counterbalance.

"For USD/JPY to reverse trend and trade lower requires policymakers to demonstrate fiscal discipline to restore credibility while the BOJ also need to resume policy normalization. A softer USD should also help. Leaning against the wind activity is not likely to reverse the JPY’s broader depreciation trend though it may moderate the pace of decline."

"Daily momentum is mild bullish while RSI fell from overbought conditions. Support at 154.40/50 levels (21 DMA, 76.4% fibo), 151.60 (61.8% fibo retracement of 2025 high to low, 50 DMA). Resistance at 158, 158.87 (previous high in 2025) and 160 levels."