[USD/JPY] BOJ Meeting and Intervention Concerns

Last week, there was news that Japan’s Finance Minister Kato and the U.S. Treasury Secretary discussed the exchange rate, which briefly led to selling of USD/JPY. However, this was eventually ignored by the market. Meanwhile, an IMF official expressed that ‘yen depreciation benefits Japan’s economy’ and that ‘the BOJ’s interest rate hikes should be very gradual,’ indicating an acceptance of a weaker yen. This perception, that intervention might be unlikely at these levels, seems to support USD/JPY buying.

However, there’s a high chance that the Bank of Japan (BOJ) may take a positive stance on rate hikes to address yen depreciation at this week’s meeting. Additionally, expectations for large rate cuts from the U.S. Federal Reserve (Fed) have significantly decreased, and dollar-buying appears to have settled. Depending on the results of the PCE deflator, rate cut expectations might rise again.

This week, with the U.S. employment report and the upcoming FOMC meeting, a steady rise in the dollar seems unlikely. If USD/JPY buying strengthens, there’s a chance of direct intervention, which could limit the upside.

Today’s forecast range for USD/JPY: 153.00 – 151.70 yen
This week’s forecast range for USD/JPY: 153.40 (61.8%) – 149.00 yen

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