Strong risk of intervention to protect USD/JPY pushing through 155 – Rabobank

Analysts at Rabobank share a brief outlook for the USD/JPY pair.

BoJ may be able to hike rates again later this year

"Current USD strength is built around the expectation that Fed rates will stay stronger for longer. The greenback has also likely been boosted by safe-haven demand stemming from fears of an escalation of the Middle East crisis. Weaker US data and a reining in of concerns over the Middle East would both be useful in stemming USD strength."

"That said, it is our central view that the USD will remain relatively firm. Alternatively, stronger Japanese economic data and a boost to expectations that the BoJ may be able to hike rates again later this year would lend the JPY some broad-based strength. Earlier today, comments from BoJ dove Noguchi indicated that he was in no rush to hike rates again. That said, assuming that Japanese real household incomes turn positive later this year, we see risk that another BoJ rate hike could follow. This, however, is unlikely for some months. In the meantime, there is strong risk of MoF intervention in an attempt to protect USD/JPY pushing through the 155 area."