The USD/JPY continues its upward trend despite verbal intervention from the Japanese Finance Minister, with the wide interest rate differential between the US and Japan being a key factor in the rise. The pair is currently trading in the mid-155.00s, driven by the recent increase in US Treasury Bond yields.
Despite repeated warnings from Finance Minister Sunichi Suzuki about monitoring the FX market closely, the USD/JPY remains resilient. Analysts are skeptical about the impact of verbal intervention on the pair, noting that even direct interventions may not have a lasting effect due to the limited firepower of the Ministry of Finance.
The upcoming Bank of Japan (BoJ) policy meeting is on the radar, with expectations of no immediate change in policy following the recent interest rate hike in March. The BoJ may raise its inflation forecasts, which could provide short-term support for the JPY.
However, analysts at Commerzbank caution that the USD may already have a lot priced in, particularly in terms of market expectations regarding future interest rate cuts by the Federal Reserve. This could make the USD vulnerable to “bad news” and limit its upside potential.
Overall, the USD/JPY’s relentless climb ahead of the BoJ meeting reflects the ongoing dynamics between the US and Japanese economies, with interest rate differentials and market expectations playing a key role in shaping the currency pair’s movements.
