Yen still under pressure: Markets await action from authorities

USD/JPY is holding near 161.84 on Tuesday, with the yen close to 40-year lows. Pressure on the Japanese currency remains as market participants continue to bet against it, with no visible currency interventions from Japanese authorities having materialised.

At the same time, investors are closely monitoring potential action from Tokyo. Japanese Finance Minister Satsuki Katayama reiterated that authorities stand ready to enter the foreign exchange market if necessary. She also noted that Tokyo and Washington maintain close consultations on currency policy matters. However, the market remains sceptical that interventions alone – without a shift in monetary policy – can provide lasting support for the yen.

Additional pressure on the Japanese currency comes from expectations of further expansion in budget spending and the Bank of Japan's slow pace of policy normalisation.

Published economic data were mixed. Nominal wages rose 3.2% year-on-year in May, but household spending fell 0.4%, pointing to continued weakness in domestic demand.

Technical analysis

On the H4 chart, USD/JPY is trading within a consolidation range around 161.92 and, following a downside breakout, is moving lower towards 161.44. This level is expected to be reached today, followed by a rebound towards 162.55. The MACD indicator supports this scenario, with its signal line below zero and pointing firmly downwards, reflecting continued bearish momentum.

On the H4 chart, USD/JPY is trading within a consolidation range around 161.92 and, following a downside breakout, is moving lower towards 161.44. This level is expected to be reached today, followed by a rebound towards 162.55. The MACD indicator supports this scenario, with its signal line below zero and pointing firmly downwards, reflecting continued bearish momentum.

Conclusion

The yen remains under pressure, trading near 40-year lows as markets continue to bet against the currency in the absence of actual intervention from Japanese authorities. While Finance Minister Katayama has reiterated readiness to act and confirmed close coordination with Washington, market participants remain doubtful that intervention alone can reverse the yen's trajectory without accompanying monetary policy shifts. Mixed domestic data – rising nominal wages but falling household spending – highlight ongoing weakness in demand. Technically, USD/JPY may see a modest pullback towards 161.44 in the near term. However, the broader outlook for the yen remains negative, with further expansion in fiscal spending and the Bank of Japan's gradual approach likely to keep the currency under pressure.