Yen steadies after dreadful week

The Japanese yen has posted gains on Monday. In the European session, USD/JPY is trading at 159.26, down 0.10%. The yen hasn’t had a winning daily session since June 19th and declined 1.5% last week. On the data front, Japan releases the Services Producer Price Index. There are no economic releases in the US but FOMC members Waller and Daly will make public statements.

BoJ hesitant to raise rates

The Bank of Japan released its summary of opinion from the June meeting on Monday. The market responded with a shrug, as the yen showed little reaction. One member called for a rate hike “without too much delay” but other members were more cautious about raising rates. The BoJ stated at its meeting earlier this month that it would provide details of tapering its massive stimulus at the July meeting and is yet to commit to higher rates.

With the Federal Reserve grappling with sticky inflation and signaling only one rate cut this year, the US/Japan rate differential is unlikely to narrow. That will make it an uphill battle for the yen to gain some ground on the US dollar.

The yen is trading close to the psychological 160 level and is close to 34-year lows. On Monday, Japan’s top currency official, Masota Kanda, delivered some verbal intervention, stating that he would take “appropriate action” in the event of “excessive moves based on speculation”. The threat of intervention by Tokyo could be preventing that yen from breaking out above 160, a level which has held since late April.

If the BoJ fails to deliver some major changes in monetary policy, it appears that the yen will continue to weaken, which will raise the possibility of currency intervention.

USD/JPY Technical

• USD/JPY pushed below support levels at 159.44 and 159.02 earlier. Below, there is support at 158.24
• There is resistance at 160.22 and 160.64

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.