USD/JPY stabilises near 159.40 during the Asian trading session on Thursday. Traders maintain a heightened level of vigilance regarding potential additional currency intervention. Some members of the Bank of Japan indicated that the pace of rate hikes should be increased, as per a summary of opinions from the meeting published on Monday. The USD/JPY pair is trading in a stable manner around 159.40 during the Asian trading hours on Thursday. The potential upside for the pair may be constrained owing to a coordinated intervention in currency markets by US and Japanese authorities. The US Producer Price Index report for July is set to be released later on Thursday.
Japanese Finance Minister Satsuki Katayama stated earlier this month that the US had collaborated in the foreign exchange market intervention, with the objective of mitigating the recent significant volatility and disorderly movements of the Japanese Yen exchange rate. US President Donald Trump confirmed US participation in the intervention during a cabinet meeting, describing the move as a “signal of friendship.” Traders will pay close attention to the 160.00 psychological level, which is perceived as a definitive threshold likely to initiate a new wave of coordinated or individual JPY-buying activities 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.
The Bank of Japan’s July meeting summary of opinions revealed that policymakers engaged in discussions regarding the potential for accelerating interest rate hikes, prompted by concerns over upside inflation risks that could lead to surpassing the 2% target. The Japanese central bank may contemplate an additional interest rate increase at its upcoming September policy meeting, following a hike in June, in response to escalating risks of higher inflation, Jijisaid. Analysts 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.
In the daily chart, USD/JPY exhibits a bearish near-term bias as the spot remains below the 100-day simple moving average and the Bollinger 20-day SMA, which continues to limit the broader structure following the recent retreat from the 163.00 area. The Relative Strength Index (14) at 43.38 is positioned slightly below the neutral 50 line, suggesting a decline in upward momentum rather than indicating outright oversold conditions. On the topside, initial resistance is positioned at the 100-day SMA at 160.00, succeeded by the Bollinger 20-day middle band near 160.65; a sustained break above this cluster would be necessary to reopen the path toward the upper Bollinger band around 165.70. On the downside, the Bollinger 20-day lower band at 155.60 represents the next significant support level, where buyers may seek to mitigate the ongoing corrective phase should selling pressure persist.
