The Japanese yen is down for a second straight day on Tuesday. USD/JPY has risen 0.45%, up 154.59, up 0.45% at the time of writing. The yen is down 1% this week after soaring 3.4% against the dollar a week earlier.
The markets are still buzzing after Japan’s Ministry of Finance apparently intervened twice last week in the currency markets in order to prop up the ailing Japanese yen. Previous interventions have provided only a brief boost for the yen and after crossing above the 160 line last week, the yen has already lost some of last week’s huge gains. With the Fed signaling that it won’t rush into cutting rates, the US/Japan rate differential remains wide and is putting pressure on the yen.
Bank of Japan Governor Ueda weighed in on the yen’s woes on Tuesday, saying that the BoJ would monitor recent yen moves in guiding policy, as such moves could have a “major impact on the economy and prices”. The BoJ tightened policy in March but rates remained around zero and Ueda hasn’t indicated plans to tighten further. Investors were not impressed and the yen continued to lose ground until last week’s intervention.
On Monday two Fed members said that the Fed could afford to be patient. Richmond Fed President Barkin said that first-quarter inflation data was “disappointing” but he remained hopeful that the current restrictive policy would dampen demand and bring inflation back to the target of 2%. New York Fed President Williams said that policy was in “a very good place” and that a rate cut would depend on the data.
USD/JPY technical
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USD/JPY is testing resistance at 154.34. Above, there is resistance at 154.79.
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There is support at 153.57 and 153.12.
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