On Tuesday, analysts from ING suggested that if the USD/JPY currency pair moves above the 157 mark, there could be a heightened risk of further intervention. The pair has stabilized around 156/157, mirroring the trends observed after the foreign exchange intervention that took place on September 22, 2022.
ING analysts anticipate that the USD/JPY could climb higher in the upcoming days, influenced not only by yield differentials but also by a potentially more hawkish Federal Reserve.
The recent behavior of the yen has led to speculation among investors about the possibility of intervention by Japan's Ministry of Finance (MoF) in the foreign exchange market. Alleged interventions are thought to have occurred at different times across global markets yesterday, although there has been no official statement from the Japanese authorities on such actions.
The MoF releases intervention data monthly, with the latest figures including transactions only until two days before the month's last trading day. For March, this cutoff was on April 26, indicating that any recent interventions would not be reflected until the end of May.
ING's analysts maintain that the MoF may have embarked on a campaign of intervention and could continue to sell foreign exchange if the USD/JPY faces further upside risks. Japanese officials are likely hoping for a softening of U.S. data, which could alleviate the pressure on the yen.
Notably, the Bank of Japan has not indicated any intention to factor the currency into its monetary policy decisions. A move of the USD/JPY pair back above the level of 157.0 is expected to significantly increase the likelihood of intervention.
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