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USD/JPY slides as Japan election supports Yen, intervention risks weigh

  • USD/JPY extends its slide for a fourth day, as Japan’s election outcome keeps the Yen supported.
  • Intervention risks remain in focus after repeated verbal warnings from Japanese authorities.
  • A softer US Dollar keeps rebounds in USD/JPY limited ahead of Friday’s US CPI.

The Japanese Yen (JPY) trades on the front foot against the US Dollar (USD) on Thursday, with USD/JPY extending its decline for a fourth straight day, driven by Japan’s election outcome and ongoing intervention concerns. At the time of writing, USD/JPY is trading near 152.80, down about 2.75% so far this week.

The Yen remains firmly bid across the board after Japanese Prime Minister Sanae Takaichi secured a decisive victory in the general election last Sunday, boosting investor confidence in Japanese assets.

The strong mandate has improved sentiment toward Japan’s policy outlook, as markets view Takaichi’s pro-growth fiscal agenda as supportive for domestic demand, easing earlier concerns that additional government spending could further strain the country’s already heavy public debt burden.

At the same time, a hawkish outlook from the Bank of Japan (BoJ) is providing modest support to the Yen, as markets increasingly expect the central bank to raise interest rates as early as March or April.

Meanwhile, intervention fears are keeping traders cautious, following repeated warnings from Japanese authorities. Japan’s top currency diplomat, Atsushi Mimura, said on Thursday that authorities are “on high alert” to excessive FX volatility, adding that officials are closely monitoring market moves with a strong sense of urgency and remain in close contact with US authorities.

On the other side of the pair, sustained USD weakness is also limiting upside in USD/JPY. The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is trading around 96.95, hovering close to two-week lows.

The Greenback failed to draw meaningful support from the latest US labour market data. Weekly Initial Jobless Claims fell to 227K from 232K, but still came in above market expectations of 222K, while Continuing Jobless Claims edged higher to 1.862M from 1.841M.

This comes after Wednesday’s upbeat US Nonfarm Payrolls report, which cooled near-term Federal Reserve (Fed) interest rate-cut expectations. The US economy added 130K jobs in January, above forecasts of 70K, while the Unemployment Rate eased to 4.3% from 4.4%.

Focus now shifts to the US Consumer Price Index (CPI) release due on Friday, which could shape expectations for the Fed’s monetary policy path, as markets continue to price roughly 50 bps of easing by the year-end.

Japanese Yen Price Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Australian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.01%-0.02%-0.35%0.39%0.46%0.16%-0.25%
EUR-0.01%-0.02%-0.36%0.38%0.46%0.15%-0.26%
GBP0.02%0.02%-0.33%0.40%0.48%0.17%-0.24%
JPY0.35%0.36%0.33%0.73%0.81%0.47%0.09%
CAD-0.39%-0.38%-0.40%-0.73%0.08%-0.23%-0.64%
AUD-0.46%-0.46%-0.48%-0.81%-0.08%-0.31%-0.71%
NZD-0.16%-0.15%-0.17%-0.47%0.23%0.31%-0.41%
CHF0.25%0.26%0.24%-0.09%0.64%0.71%0.41%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

Author

Vishal Chaturvedi

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.

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