Japanese Yen flatlines near 159.50 on intervention risks, US PPI data looms
- USD/JPY steadies around 159.40 in Thursday’s Asian session.
- Traders remain on high alert for further currency intervention.
- Some BoJ members said rate hikes should be accelerated, according to a summary of opinions at the meeting released Monday.
The USD/JPY pair trades on a flat note near 159.40 during the Asian trading hours on Thursday. The potential upside for the pair might be limited due to a coordinated intervention in currency markets by US and Japanese authorities. The US Producer Price Index (PPI) report for July will be published later on Thursday.
Japanese Finance Minister Satsuki Katayama said earlier this month that the US had jointly intervened in the foreign exchange market, aiming to address the recent sharp fluctuations and chaotic trends of the Japanese Yen (JPY) exchange rate. US President Donald Trump confirmed US participation in the intervention during a cabinet meeting, calling the move a “signal of friendship.”
Traders will closely watch the 160.00 psychological level as it is seen as a clear threshold that will likely trigger a fresh round of coordinated or solo JPY-buying operations from Tokyo.
“Intervention has scared markets, but has not stopped the laws of finance which say money flows in the direction of maximum returns … as long as the cost of money in Japan is lower than the return overseas, carry trades will re-assert,” said Jesper Koll, expert director at Monex Group.
The Bank of Japan's (BoJ) July meeting summary of opinions showed policymakers debated accelerating interest rate hikes due to upside inflation risks of overshooting the 2% target. The Japanese central bank may consider an additional interest rate increase at its next September policy meeting, following a hike in June, in response to rising risks of higher inflation, Jijisaid
Yen steadies as US–Japan policy tensions simmer around USDJPY levels
Analysts at Scotiabank point out that, while "there have been no comments from FinMin Katayama or ViceMin Mimuri," domestic media are increasingly "highlighting the potential for tension between US officials and Japan’s government as the US pushes for BoJ tightening." Against this backdrop, the bank notes that for USDJPY "we see resistance around 159.50 and note support around 158.50," levels that are likely to remain in focus as markets gauge the risk of further policy-related friction.
Technical Analysis: USD/JPY remains capped below the 100-day SMA
In the daily chart, USD/JPY holds a bearish near-term bias as spot remains below the 100-day simple moving average (SMA) and the Bollinger 20-day SMA, keeping the broader structure capped after the recent retreat from the 163.00 area. The Relative Strength Index (14) at 43.38 sits just under the neutral 50 line, hinting at waning upside momentum rather than outright oversold conditions.
On the topside, initial resistance is set at the 100-day SMA at 160.00, followed by the Bollinger 20-day middle band near 160.65; a sustained break above this cluster would be needed to reopen the path toward the upper Bollinger band around 165.70. On the downside, the Bollinger 20-day lower band at 155.60 forms the next notable support, where buyers could attempt to slow the current corrective phase if selling pressure extends.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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