Japanese yen steady as intervention worries continue

The Japanese yen is drifting on Tuesday. In the European session, USD/JPY is trading at 151.88, up 0.02%.

It’s as light data calendar today. Japan’s average cash earnings rose 1.8% y/y in February after a 2% gain in January. This beat the market estimate of 1.4%. Still, the better-than-expected wage growth release didn’t provide a boost to the yen.

Is 152 a line in the sand for Tokyo?

The yen continues to trade at multi-year lows, which has raised fears of intervention from the Ministry of Finance (MOF). The yen fell to a 34-year low of 151.97 in March and there are concerns that the 152 line could be a line in the sand for intervention. At the same time, Japanese officials have often said that they are more concerned about excessive moves from the yen rather than a particular exchange rate. That could mean there is even more room for the yen to fall before triggering a response from Tokyo.

The MoF last intervened in October 2022 when the yen fell close to the 152 line. Currently, it has resorted to verbal intervention in an attempt to stop speculators from selling the yen, warning that all measures are on the table.

The Bank of Japan made a major shift in policy in March when it lifted rates out of negative territory, but this has failed to shore up the yen. A key reason is that the US/Japan rate differential remains wide – after inflation, Japan’s 10-year yield is around 0.65, versus 2% in the US. The BoJ hasn’t signaled that it will be following up with further rate hikes, which means that the yen is unlikely to show much improvement without intervention.

USD/JPY Technical

• USD/JPY faces resistance at 1.52.12 and 152.62
• There is support at 151.47 and 150.97

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